Our objective was to determine whether the U.S. Postal Service made purchase card transactions that were potentially illegal, improper, or erroneous. We performed this audit in conjunction with a government-wide audit initiated by the Council of the Inspectors General on Integrity and Efficiency, Information Technology Committee, to determine risks associated with government purchase card transactions. The OIG performed this audit with 22 other Inspectors General, generally using the same audit objective, scope, and methodology.
We obtained purchase card transaction data from U.S. Bank from October 1, 2016, through March 31, 2017. We applied seven algorithms (criteria), by quarter, to identify the Postal Service’s high-risk transactions: (1) prohibited/questionable merchant category code purchases; (2) single purchase limits; (3) split transactions; (4) purchases including sales tax; (5) weekend/holiday purchases; (6) purchases made through third-party vendors; and (7) closed accounts.
From those transactions that met at least one of the seven algorithms (criteria), we considered the top 25 percent as high-risk transactions, determined based on a weighted calculation from the number of algorithms (criteria) that a transaction met and by the dollar amount. We removed nonexpense purchase card transactions from the high-risk population (such as vehicle repairs and vehicle parts) and randomly selected 100 transactions for review. Because our sampled transactions were selected from a judgmentally targeted population, the sample was not representative of the universe.
What the OIG Found
In general, for the transactions sampled, Postal Service cardholders made purchase card transactions that were legal, proper, and correct. However, we found that 19 of the 100 sampled purchase card transactions, totaling $11,617, did not comply with Postal Service policies. Specifically:
- Cardholders, or other authorized employees, did not submit purchase requests in the requisitioning and approval system for 15 of the 19 transactions, totaling $11,119.
- Cardholders did not maintain accurate and complete records, including sales receipts or vendor invoices, to support purchases for four of the 19 transactions, totaling $498.
These issues occurred because approving officials were not required to request and review cardholders’ supporting documentation when approving cardholders’ monthly bank statements to ensure compliance with policies. Additionally, the current purchase card program does not have the capability to electronically file supporting documentation.
The Postal Service has policies requiring cardholders to obtain requisition approval before making a purchase and to maintain accurate and complete records of all purchase card transactions for three years. These records must include approved requisition requests, receipts, delivery confirmation, and any other related purchase documentation. However, since approving officials are not required to periodically review the cardholder’s documentation, greater opportunities exist for illegal, improper, or erroneous purchases.
Beginning April 1, 2017, the Postal Service’s Purchasing Shared Services Center (PSSC) performed weekly compliance audits of selected purchase card transactions. As of July 17, 2017, they audited 3,175 purchase card transactions and found 64 percent compliant and 30 percent non-compliant (6 percent were pending). The PSSC suspended 917 purchase cards for noncompliance and reactivated 427 purchase cards after cardholders took corrective actions. The PSSC, however, does not have follow-up procedures for cardholders who are non-responsive to the PSSC’s request for corrective actions. The PSSC is developing the procedures and estimated they would be implemented by October 15, 2017.
These ongoing efforts should help improve cardholder compliance.
What the OIG Recommended
We recommended management:
- Coordinate with the General Services Administration to request that the purchase card program electronically file purchase card documentation to provide approving officials the ability to periodically review cardholders’ supporting documentation.
- Finalize procedures to resolve outstanding cardholder inquiries from the PSSC, and include in the procedures notification to the OIG for those cardholders who did not respond to the PSSC’s requests.