Federal Abuse of Credit Cards

In an audit released on April 8, 2008, investigators for the Federal Government Accountability Office (GAO) found significant abuse of credit card transactions by federal employees. Problems included unauthorized purchases, purchases for items that could not be accounted for, inappropriate purchases, and failure to follow procedures.

Last year, federal employees spent $20 billion using the “SmartPay” credit cards that are widely viewed as a means to streamline procurement methods. However, use of government credit cards comes with significant risks if not monitored carefully by supervisors and managers and if insufficient systems are in place for monitoring the use of the credit cards.

Inappropriate purchases uncovered by the federal auditors included payment for lingerie, gambling, iPods, Internet dating services, and a $13,000 steak dinner.

If your agency uses or is considering using a procurement credit card system, make sure that you have adequate systems and management controls in place that include regular reporting, blocking of purchases from certain categories of merchants, and that managers and employees are held accountable for their actions. Government credit cards are a decentralized method of procurement that is convenient, but can be risky, as the audit from GAO found.

For more information about the audit, see the article in the Washington Post.