VHA Purchase Cards:

Internal Controls Over the Purchase Card Program Need Improvement

GAO-04-737: Published: Jun 7, 2004. Publicly Released: Jun 17, 2004.

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The Department of Veterans Affairs Office of Inspector General (OIG) has identified significant vulnerabilities in Veterans Affairs' (VA) use of government purchase cards. In its April 26, 2004 report, the OIG reported instances of fraudulent activity totaling $435,900, and numerous improper and questionable uses of the purchase cards totaling $1.1 million. Given that VHA comprised at least 90 percent of VA's dollar and transaction volume for fiscal year 2002, GAO was asked to determine whether existing controls at VHA were designed to provide reasonable assurance that in the future, improper purchases would be prevented or detected in the normal course of business, purchase card and convenience check expenditures were made in compliance with applicable laws and regulations, and purchases were made for a reasonable cost and a valid government need.

Weaknesses in the Veterans Health Administration's (VHA) controls over use of purchase cards and convenience checks resulted in instances of improper, wasteful, and questionable purchases. These internal control weaknesses included inadequate segregation of duties; lack of key supporting documents; lack of timely recording, reconciling, and reviewing of transactions; and insufficient program monitoring activities. This lack of adequate internal controls resulted in numerous violations of applicable laws and regulations and VA/VHA purchase card policies that GAO identified as improper purchases. These included purchases intended for personal use, purchases made from an improper source, purchases split into two or more transactions to circumvent single purchase limits, noncompliance with simplified acquisition procedures, incorrect procurement procedures, and improper use of convenience checks. GAO's work also identified over $300,000 in purchases that were considered wasteful--that is, excessive in cost or for questionable government need--or were considered questionable because there was insufficient or no documentation to determine the propriety of the transaction. Examples of wasteful and questionable purchases included two purchases for 3,348 movie gift certificates totaling over $30,000 for employee awards that were not supported by award letters or justifications; a purchase for a digital camera totaling $999 when there were other less costly digital cameras widely available; and a purchase of 3 cases of beer totaling $38.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In 2008, the Department of Veterans Affairs issued Handbook 7002, Logistics Management Procedures which establishes criteria (by type of equipment) for the receipt and acceptance of purchase card procurements. The VA Office of Management mandated early implementation on July 3, 2008. The handbook provides guidance to VHA facility accountable officers on criteria to use in assuring independent verification of the receipt of items purchased with a purchase card, particularly for non-expendable items. Non-expendable items are defined by the handbook as property which has a continuing use, is not consumed in use, is of a durable nature with an expected service life of two or more years, has an acquisition cost of $300 or more, and does not become a fixture or lose its identity as a component of other equipment or plant. The new VA handbook criteria satisfies the intent of this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish appropriate criteria, including types of items and dollar thresholds for requiring and documenting independent receiving and acceptance of items obtained with a purchase card.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  2. Status: Closed - Implemented

    Comments: In 2008, the Department of Veterans Affairs (VA) issued VA Handbook 7002, Logistics Management Procedures, which the VA Office of Management mandated early implementation on July 3, 2008. The handbook establishes procedures for independently verifying receipt of items purchased using the purchase card, including requiring VA purchase card procurements to go to the authorized receiving activity to document independent receipt of items purchased. In addition, for items picked up by the cardholder, the handbook requires the purchase cardholder to electronically sign in the computerized accountability system that VA received items procured using the purchase card. The new VA handbook satisfies the intent of this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish specific procedures for documenting independent receiving, such as requiring the cardholder to maintain a signed copy of the receiving report showing the purchase was received in the warehouse, or requiring the approving official or supervisor to sign and date the vendor invoice, packing slip, sales or credit card receipt to verify that the items purchased were actually received.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  3. Status: Closed - Implemented

    Comments: VHA's Office of Procurement and Logistics National Purchase Card Program requires networks to verify that no VHA A/OPCs hold responsibilities as either a cardholder or an approving official, which is consistent with VHA Handbook 1730.1, which states that program coordinators at the Veterans Integrated Service Network and facility level are restricted from being cardholders and approving officials. In addition, the VHA National Purchase Card Program manager routinely verifies separation of duties in the issuing bank system.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should require that VHA senior management at the VA headquarters in Washington, D.C. document its approval that the one VHA Agency/Organization Program Coordinator (A/OPC) can continue to function as a cardholder since this is inconsistent with VA/VHA policy.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  4. Status: Closed - Implemented

    Comments: VHA Handbook 1730.1 restricts Veterans Integrated Service Network and facility level program coordinators from being cardholders or approving officials. In addition, the VHA National Purchase Card Program manager routinely verifies separation of duties in the issuing bank system. Separate procedures to periodically review program coordinators' purchasing activities are no longer needed to strengthen internal controls of VHA's purchase card program.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish procedures that require an independent person to periodically review this A/OPCs' purchasing activities.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  5. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.1, Use and Management of the Government Purchase Card Program, requires the use of detailed purchase card orders for all purchase card transactions. The VHA Handbook also requires cardholders to maintain appropriate receipt records such as packing slips, sales slips, receipts, etc. The handbook directs cardholders to keep all procurement and voucher documentation for six years and three months. These actions are sufficient to close this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish guidance dictating vendor documentation needed to support the purchase transactions (in description, quantity, and price) that provides the basis for reconciling electronically received charges from Citibank.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  6. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of Veterans Health Administration (VHA) Handbook 1730.1, Use and Management of the Government Purchase Card Program, addresses the documentation requirements for the receipt of goods. The policy requires that the cardholder maintain appropriate receipt documentation, such as the packing slip, receipt, sales slip, cash register slip, etc, for six years and three months. The policy also requires that the cardholder must ensure orders are delivered in a timely manner and reconciled with payment within 30 days after the payment is in the financial management system. In addition, the June 21, 2005, update of the Veterans Affairs (VA) Handbook 4080, Government Purchase Card Procedures, specifies that there must be a clear separation of duties for the assignment of responsibilities such as receiving assets among others. Updated VA and VHA policy satisfy this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should require cardholders to maintain documentation of timely and independent receiving and acceptance of items obtained with a purchase card.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  7. Status: Closed - Implemented

    Comments: The June 17, 2005, VHA handbook 1730.1, Use and Management of the Government Purchase Card Program, addresses documentation requirements for the receipt of goods. The policy requires that the cardholder maintain appropriate receipt, procurement, and voucher documentation for six years and three months. This is in accordance with the current FAR, which states in Subpart 4.805, Storage, Handling, and Disposal of Contract Files, that agencies must prescribe procedures requiring contracts and related records and documents be retained for six years and three months after final payment. This recommendation is satisfied with updated VHA policy.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should incorporate into VHA's existing purchase card guidance, file retention requirements as mandated by FAR Subpart 4.805 Storage, Handling, and Disposal of Contract Files.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  8. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans' Health Administration (VHA) Handbook 1730.01, Use and Management of the Government Purchase Card, requires that cardholders input purchases into the computer system within one day of purchase. It also requires that cardholders reconcile seventy-five percent of payments within 10 calendar days and ninety-five percent of payments within seventeen calendar days. Cardholders must reconcile all payments within thirty days. According to VHA's approved Purchase Card Program Coordinator Desk Reference, the best tool to review open orders and determine what follow-up is necessary is the unreconciled report. The desk reference gives instructions for printing out an unreconciled report, which reports the purchase order date and whether the receiving process is complete. Updated VHA policy and program coordinator guidance satisfies this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should identify cardholders who repeatedly fall outside the required timeframes for recording purchase card order information into the VA's purchase card order system and for performing reconciliations of purchases.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  9. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.01, Use and Management of the Government Purchase Card, requires that approving officials review and certify or take appropriate action for each completed transaction within fourteen working days. The policy also requires the program coordinator to perform monthly reviews to identify old, undelivered, and partial orders and ensure that proper action is taken. In addition, the approved Purchase Card Program Coordinator Desk Reference instructs that the program coordinator should generate a weekly report of unapproved purchase card data and follow-up with approving officials to ensure timely approvals. Updated VHA policy and program coordinator guidance satisfy this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should identify approving officials who continually fail to meet the required timeframes for reviewing and certifying that cardholder purchases are legal and proper.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  10. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.01, Use and Management of the Government Purchase Card, mandates that cardholders and approving officials receive refresher training once every two years unless a shorter period is required. In addition, the policy requires that the facility fiscal officer ensure joint review with the program coordinator, head contracting agency (HCA), or designee of the cardholder and approving official. If the joint review discovers irregularities then the appropriate corrective action, including re-training, reduced limits, or loss of card must result. Updated VHA policy satisfies this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should provide adequate retraining for these cardholders and approving officials and consider whether to suspend their responsibilities if the established timeframes continue not to be met.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  11. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) Handbook 4080, Government Purchase Card Procedures, dated June 21, 2005, requires cardholders to inquire about prompt payment discounts at the time of purchase. In addition, the mandatory General Services Administration (GSA) training specifies that cardholders should inquire about discounts at the time of purchase. VA policy and VHA mandatory training satisfy this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish procedures that require cardholders, at the time of purchase, to determine whether vendors offer purchase discounts when early payments are made for goods and services rendered.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  12. Status: Closed - Implemented

    Comments: VHA Handbook 1730.1 requires that purchase card transactions make use of Federal Supply Schedule (FSS) contracts and, during the past 10 years, vendor-offered discounts have been incorporated into FSS contracts. Separate auditing of the few non-FSS purchases is no longer needed to strengthen internal controls of purchase card practices.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish procedures requiring internal management review auditors to identify loss of vendor-offered discounts.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  13. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.01, Use and Management of the Government Purchase Card, requires the program coordinator to close accounts and cancel cards within three business days after receipt and reconciliation of the last outstanding order when the cardholder leaves the agency. Updated VHA policy satisfies this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish timeframes for the prompt cancellation of purchase card accounts when the cardholder has left the agency and all outstanding purchase orders have been reconciled.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  14. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.01, Use and Management of the Government Purchase Card, requires the program coordinator to assess annually the need for all outstanding purchase cards. The policy also directs the program coordinator to close accounts and cancel cards within three business days after receipt and reconciliation of the last outstanding order. In addition, the approved Program Coordinator Desk Reference places responsibility for the timely inactivation of a purchase card on the program coordinator. Updated VHA policy and program coordinator guidance satisfy this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish procedures to ensure prompt cancellation of purchase cards when cardholders leave VA, are reassigned, or no longer have valid needs for the cards.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  15. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.01, Use and Management of the Government Purchase Card, requires the program coordinator to annually asses the need for all outstanding purchase cards and limits. The program coordinator can do this on a continuing basis so long as they review all accounts at least once a year. Updated VHA policy satisfies this requirement.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish procedures to periodically assess whether each cardholder continues to have a valid need for a purchase card.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  16. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of Veterans Health Administration (VHA) Handbook 1730.1, Use and Management of the Government Purchase Card Program, requires program coordinators to annually assess the valid need for all outstanding purchase cards and purchase limits. In addition, Chief Financial Officer (CFO) approved Approving Official Desk Reference Guide, lists making recommendations on single purchase limits and monthly spending limits as part of the duties of approving officials. Thus, this recommendation is satisfied.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should review existing credit limits and monthly spending and develop policies and strategies on credit limits provided to cardholders with a focus on minimizing specific cardholder spending authority and minimizing the federal government's financial exposure.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  17. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.01, Use and Management of the Government Purchase Card, includes Veterans Affairs (VA) Form 10-0427, Quarterly Purchase Card Certification Report, which requires facilities to report, among other things, the workload of its approving officials. Among the items facilities must report are the number of approving officials, the number of transactions they approve during the quarter, and what limit on cardholders and transactions the program coordinator, fiscal chief, and logistics chief would recommend for approving officials. Quarterly reporting using VA Form 10-0427 satisfies this recommendation.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should assess the adequacy of human capital resources devoted to the purchase card program, especially for oversight activities, at the A/OPC level, and provide needed resources.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  18. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.1, Use and Management of the Government Purchase Card Program, the cardholder must document in detail any purchase that is likely to appear questionable to auditors such as tickets, meals, clothing, etc. At a minimum, the cardholder must document the names of ticket and food recipients as well as their identity such as staff, patients, etc. For appliances and other items that appear to be for personal use the cardholder must document the explicit use of the item. Updated VHA policy satisfies this recommendation.

    Recommendation: With regard to improving and enforcing compliance with purchasing requirements, VHA should develop written detailed procedures and guidelines to aid cardholders in complying with the Federal Acquisition Regulation, Veterans Affairs Acquisition Regulations and other internal policies and procedures when using the purchase cards and convenience checks as procurement and payment mechanisms for goods and services rendered. Such procedures could be either incorporated in VHA's existing guidance over the purchase card program or presented separately. Specifically, the Acting Under Secretary for Health should establish steps to be followed when circumstances permit the purchase of generally prohibited items such as clothing, food, and gifts.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  19. Status: Closed - Implemented

    Comments: The Department of Veterans Affairs (VA) Directive 7401.6, Limited Authority to Pay by Purchase Card, allows one circumstance when a cardholder may exceed their micro-purchase limit. This circumstance allows a contracting officer's representative (COR) to delegate individual authority to use a Government Purchase Card to pay for invoices associated with a local or regional contract. In addition, VHA implemented multiple reviews to ensure that transactions are scrutinized in order to catch instances of cardholders splitting purchases. For example, the Chief Financial Officer (CFO) approved Approving Official Desk Reference Guide, states that one of the approving official's duties is to monitor the use of purchase cards to ensure that purchases are not fragmented to stay within cardholder limits. VHA Handbook 1730.1, Use and Management of the Government Purchase Card Program, also directs the Head Contracting Activity (HCA) to audit the cardholder in conjunction with the program coordinator and facility director, to ensure that among other things, cardholders did not split orders to avoid the purchase limit. These reviews along with guidance specifying when a cardholder may exceed their micro-purchase limit satisfy this recommendation.

    Recommendation: With regard to improving and enforcing compliance with purchasing requirements, VHA should develop written detailed procedures and guidelines to aid cardholders in complying with the Federal Acquisition Regulation, Veterans Affairs Acquisition Regulations and other internal policies and procedures when using the purchase cards and convenience checks as procurement and payment mechanisms for goods and services rendered. Such procedures could be either incorporated in VHA's existing guidance over the purchase card program or presented separately. Specifically, the Acting Under Secretary for Health should establish steps to be followed when the purchase amount will exceed the $2,500 micro-purchase limit or the cardholders' single purchase limit to prevent splitting the purchase.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  20. Status: Closed - Implemented

    Comments: VA Directive 7401.6, Limited Authority to Pay by Purchase Card, which does specify when unwarranted cardholders can use the purchase card for task or delivery orders above $2,500 that fall under locally or regionally awarded contracts. In order to make such payment a contracting officer representative (COR) must give the authority to the cardholder. This policy does specify when and how a cardholder with only micro-purchase authority can make a purchase over the micro-purchase threshold of $2,500. Thus, this satisfies the recommendation.

    Recommendation: With regard to improving and enforcing compliance with purchasing requirements, VHA should develop written detailed procedures and guidelines to aid cardholders in complying with the Federal Acquisition Regulation, Veterans Affairs Acquisition Regulations and other internal policies and procedures when using the purchase cards and convenience checks as procurement and payment mechanisms for goods and services rendered. Such procedures could be either incorporated in VHA's existing guidance over the purchase card program or presented separately. Specifically, the Acting Under Secretary for Health should establish steps to be followed if the cardholders, with only micropurchase authority, need to make a purchase over the $2,500 micropurchase threshold.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  21. Status: Closed - Implemented

    Comments: Veterans Health Administration (VHA) Handbook 1730.1, Use and Management of the Government Purchase Card Program, requires cardholders to comply with the Javits-Wagner-O'Day Act (JWOD) and use mandatory sources. The approved Program Coordinator Desk Reference also contains a template in Appendix 18 that allows the program coordinator to ensure that mandatory sources of supplies and equipment are used. In addition, According to the Veterans Affairs (VA) Office of the Inspector General (OIG) Veterans Health Administration (VHA) cardholders are required to take the General Service Administration's (GSA) Smartpay training. One of the topics covered in the training is that cardholders need to learn how to select required sources of supply and applicable acquisition procedures. Updated VHA policy, program coordinator guidelines, and training satisfy this recommendation.

    Recommendation: With regard to improving and enforcing compliance with purchasing requirements, VHA should develop written detailed procedures and guidelines to aid cardholders in complying with the Federal Acquisition Regulation, Veterans Affairs Acquisition Regulations and other internal policies and procedures when using the purchase cards and convenience checks as procurement and payment mechanisms for goods and services rendered. Such procedures could be either incorporated in VHA's existing guidance over the purchase card program or presented separately. Specifically, the Acting Under Secretary for Health should establish steps to be followed when cardholders request to make purchases of office supplies and other goods from other than a mandatory source supplier for items that are "essentially the same."

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  22. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of VHA Handbook 1730.1, Use and Management of the Government Purchase Card Program, in accordance with Federal Acquisition Regulations (FAR), requires that cardholders pay reasonable prices unless a premium is justified and documented. The handbook along with approving official guidance does specify that reviews and audits of purchase card transactions take place to ensure that cardholders do not split transactions to circumvent the $2,500 micro-purchase limit. With these reviews and audits VHA possess the ability to ensure that cardholders with only micro-purchase authority stay under the $2,500 limit and so long as they pay reasonable prices for their purchases, they comply with FAR. This fulfills the intent of this recommendation.

    Recommendation: With regard to improving and enforcing compliance with purchasing requirements, VHA should develop written detailed procedures and guidelines to aid cardholders in complying with the Federal Acquisition Regulation, Veterans Affairs Acquisition Regulations and other internal policies and procedures when using the purchase cards and convenience checks as procurement and payment mechanisms for goods and services rendered. Such procedures could be either incorporated in VHA's existing guidance over the purchase card program or presented separately. Specifically, the Acting Under Secretary for Health should establish steps on how to document the use of competition and circumstances under which it can be justified not to use competitive procedures.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  23. Status: Closed - Implemented

    Comments: VA has limited the number of cardholders by only allowing warranted contracting officers to use purchase cards with limits greater than the micro-purchase limit. In addition, VA has detailed policies and procedures regarding procurement.

    Recommendation: With regard to improving and enforcing compliance with purchasing requirements, VHA should develop written detailed procedures and guidelines to aid cardholders in complying with the Federal Acquisition Regulation, Veterans Affairs Acquisition Regulations and other internal policies and procedures when using the purchase cards and convenience checks as procurement and payment mechanisms for goods and services rendered. Such procedures could be either incorporated in VHA's existing guidance over the purchase card program or presented separately. Specifically, the Acting Under Secretary for Health should establish steps on how to document efforts to secure free conference space before purchasing rental of conference room facilities.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  24. Status: Closed - Implemented

    Comments: The VA Talent Management System Online Purchase Card training course #5863 is required for all cardholders, convenience check writers, and approving officials. This training is required every 2 years and covers topics such as VA's policies and procedures, segregation of duties, and retention of supporting documentation.

    Recommendation: With regard to improving and enforcing compliance with purchasing requirements, VHA should develop written detailed procedures and guidelines to aid cardholders in complying with the Federal Acquisition Regulation, Veterans Affairs Acquisition Regulations and other internal policies and procedures when using the purchase cards and convenience checks as procurement and payment mechanisms for goods and services rendered. Such procedures could be either incorporated in VHA's existing guidance over the purchase card program or presented separately. Specifically, the Acting Under Secretary for Health should reiterate in VHA's refresher training to cardholders and approving officials areas discussed in this report, such as segregation of duties, documentation requirements and retention of supporting documentation, taking advantage of available vendor-offered discounts, canceling of departed cardholders' accounts, applicable laws and regulations, and agency policies and procedures.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  25. Status: Closed - Implemented

    Comments: Since 2009, agent cashiers have been required to take the purchase card refresher training every 2 years. The VA Talent Management System Online Purchase Card training course #5863 is required for all cardholders, convenience check writers, and approving officials.

    Recommendation: With regard to improving and enforcing compliance with purchasing requirements, VHA should develop written detailed procedures and guidelines to aid cardholders in complying with the Federal Acquisition Regulation, Veterans Affairs Acquisition Regulations and other internal policies and procedures when using the purchase cards and convenience checks as procurement and payment mechanisms for goods and services rendered. Such procedures could be either incorporated in VHA's existing guidance over the purchase card program or presented separately. Specifically, the Acting Under Secretary for Health should provide refresher training to agent cashiers on the areas discussed in this report, such as purchases that exceeded established check limits and payments to vendors who accept the purchase card as a form of payment.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  26. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.1, Use and Management of the Government, now requires the program coordinator to take action against cardholders who frequently or flagrantly fail to comply with policies and procedures like making split purchases or exceeding established dollar thresholds. Updated VHA policy satisfies this recommendation.

    Recommendation: With regard to improving and enforcing compliance with purchasing requirements, VHA should develop written detailed procedures and guidelines to aid cardholders in complying with the Federal Acquisition Regulation, Veterans Affairs Acquisition Regulations and other internal policies and procedures when using the purchase cards and convenience checks as procurement and payment mechanisms for goods and services rendered. Such procedures could be either incorporated in VHA's existing guidance over the purchase card program or presented separately. Specifically, the Acting Under Secretary for Health should consider whether to revoke or suspend purchasing authority of cardholders who are found to be frequently or flagrantly noncompliant with policies and procedures, such as cardholders making split purchases, procuring goods and services beyond their purchasing authority, or making purchases exceeding established dollar thresholds.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  27. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.1, Use and Management of the Government, requires cardholders to track and document award purchases to the end user. The policy also instructs the cardholder to include in the documentation who the award is for and for what purpose they are receiving the award. The cardholder must maintain copies of this documentation in their purchase card order file. In 2008, VHA provided documentation of two separate award purchases, which include the purpose of the awards and the names of the recipients. By requiring cardholders to maintain this information, VHA policy satisfies this recommendation.

    Recommendation: With regard to purchases that may be at an excessive cost or for questionable government need, the Acting Under Secretary for Health should require that cardholders or others track and document award purchases to the end user, including who received the award and the purposes for which the recipient is being recognized. Copies should also be maintained in the purchase card order file.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  28. Status: Closed - Implemented

    Comments: The June 17, 2005, reissue of the Veterans Health Administration (VHA) Handbook 1730.1, Use and Management of the Government, requires cardholders to maintain detailed documentation on questionable purchases. At minimum cardholders are required to document the names of ticket recipients along with their identity as staff or patients. In 2008, VHA provided GAO with detailed documentation showing a purchase cardholder purchased lunch, over the course of several days, for volunteers. In addition, the Chief of Acquisition & Material Management provided documentation showing that volunteers sign in electronically in order to receive lunch. Current VHA policy and the documentation provided of related action taken combine to demonstrate that VHA took action to address our recommendation that cardholders document transactions in purchase card order files.

    Recommendation: With regard to purchases that may be at an excessive cost or for questionable government need, the Acting Under Secretary for Health should require that cardholders or others track and document ticket purchases for recreational activities to the end user, including who received the ticket, date received, and signature by the recipient as evidence of receipt. Copies should also be maintained in the purchase card order file.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  29. Status: Closed - Implemented

    Comments: VHA Handbook 1730.1 requires that cardholders maintain appropriate receipt records, which include invoices, itemized packing slips (includes item description and price), receipts, cash register slips, and sales slips.

    Recommendation: With regard to purchases that may be at an excessive cost or for questionable government need, the Acting Under Secretary for Health should follow up on transactions we identified for which no supporting documentation was provided to determine whether the items purchased were for a legitimate government need.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  30. Status: Closed - Implemented

    Comments: According to the Veterans Health Administration (VHA) June 2006 status update, Veterans Affairs (VA) Handbook 4080, Government Purchase Card Procedures, and VHA Handbook 1730.1, Use and Management of the Government Purchase Card Program, address the issue of disciplinary and corrective action against cardholders who make purchases that VHA determines as not for a legitimate government need. VA Handbook 4080 states that any violation of VA policy, including intentional misuse of the government purchase card, will result in penalties, which include revocation of the government purchase cards, financial liability, and possible termination of employment. In addition, VHA Handbook 1730.1 requires the program coordinator to take appropriate disciplinary action, such as revocation or termination, against any cardholder that violates purchase card procedures. VHA Handbook 1730.1 also warns the cardholder that inappropriate use of the card can result in disciplinary action and possible financial liability for the cost of the procurement. Further, in 2008, VHA submitted documentation for two cases in which supervisors took written and verbal action with respect to a cardholder's inappropriate transactions. Consequently, VHA's additional guidance in this area, as well as its documentation of disciplinary actions taken against cardholders that inappropriately used purchase cards combined to substantially address the intent of this recommendation.

    Recommendation: With regard to purchases that may be at an excessive cost or for questionable government need, the Acting Under Secretary for Health should take appropriate disciplinary or corrective action for purchases determined to be not for a legitimate government need.

    Agency Affected: Department of Veterans Affairs

  31. Status: Closed - Implemented

    Comments: In 2010, VA issued Standard Operating Procedure (SOP) 170-050-06, Convenience Checks, which requires that the following documentation be retained for each convenience check disbursed: copy of VA Form 90-2237 (Request, Turn-In, and Receipt for Property of Service), copy of convenience check, detailed invoice or sales receipt, other applicable documents as related to purchase cards.

    Recommendation: To improve internal controls over convenience check purchasing, the Secretary of the Veterans Affairs, in conjunction with the Acting Under Secretary for Health, should require agent cashiers to maintain written documentation that authorizes the disbursement of funds to third parties.

    Agency Affected: Department of Veterans Affairs

  32. Status: Closed - Implemented

    Comments: In 2010, VA issued Standard Operating Procedure (SOP) 170-050-06, Convenience Checks, which requires that the following documentation be retained for each convenience check disbursed: copy of VA Form 90-2237 (Request, Turn-In, and Receipt for Property of Service), copy of convenience check, detailed invoice or sales receipt, other applicable documents as related to purchase cards.

    Recommendation: To improve internal controls over convenience check purchasing, the Secretary of the Veterans Affairs, in conjunction with the Acting Under Secretary for Health, should establish detailed procedures that specify the types of documentation that agent cashiers must obtain from the requesting office that support the disbursement of funds to third parties via convenience checks.

    Agency Affected: Department of Veterans Affairs

  33. Status: Closed - Implemented

    Comments: In 2010, VA issued the Agency Cashier Policy Volume VIII, Chapter 3, Appendix J, which describes the restrictions on the use of convenience checks. In addition, VA's Government Purchase Card policy states that the use of convenience checks is to be the payment method of last resort when no reasonable alternative merchant is available that accepts the purchase card.

    Recommendation: To improve internal controls over convenience check purchasing, the Secretary of the Veterans Affairs, in conjunction with the Acting Under Secretary for Health, should establish detailed criteria in VA's purchase card guidance for determining under what situations convenience checks provide the "most cost-effective and practical procurement and disbursement method" when using in lieu of the purchase card. Incorporate this criteria in VA's convenience check guidance as well.

    Agency Affected: Department of Veterans Affairs

  34. Status: Closed - Implemented

    Comments: VHA Handbook 1730.1, Use and Management of the Government Purchase Card Program, states that the purchase card documentation must be kept for 6 years and 3 months.

    Recommendation: To improve internal controls over convenience check purchasing, the Secretary of the Veterans Affairs, in conjunction with the Acting Under Secretary for Health, should incorporate into VA's existing convenience check guidance, file retention requirements as mandated by FAR Subpart 4.805 Storage, Handling, and Disposal of Contract Files.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  35. Status: Closed - Implemented

    Comments: VHA Handbook 1730.1 requires that purchase card transactions make use of Federal Supply Schedule (FSS) contracts and, during the past 10 years, vendor-offered discounts have been incorporated into FSS contracts. Separate auditing of the few non-FSS purchases is no longer needed to strengthen internal controls of purchase card practices.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish procedures requiring internal management review auditors to determine the frequency of occurrences and actual dollars lost to the government.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

  36. Status: Closed - Implemented

    Comments: VHA Handbook 1730.1 requires that purchase card transactions make use of Federal Supply Schedule (FSS) contracts and, during the past 10 years, vendor-offered discounts have been incorporated into FSS contracts. Separate auditing of the few non-FSS purchases is no longer needed to strengthen internal controls of purchase card practices.

    Recommendation: With regard to improving internal controls over purchasing, the Acting Under Secretary for Health should establish procedures requiring internal management review auditors to periodically report to VHA management for consolidation and further review so that appropriate actions can be taken.

    Agency Affected: Department of Veterans Affairs: Office of the Under Secretary for Health

 

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