Stopping Abuse of Government Charge Cards

Perseverance pays off.  In September, Congress gave final approval to a reform initiative I launched nearly 10 years ago by exposing purchases made by federal workers with government purchase and travel cards, including kitchen appliances, jewelry, gambling, cruises, and even the tab at gentlemen’s clubs and legalized brothels.

It shouldn’t take a decade for Washington to do everything possible to stop this sort of abuse, but Washington is an island surrounded by reality.  The good news is, at last, my legislation to require federal agencies to put new controls on government charge cards and enforce more stringent penalties for violations by federal employees (including dismissal) is on the President’s desk awaiting his signature.

It’s a matter of accountability.  The public trust has been violated by abuse of government charge cards.  By putting some common-sense controls into the law, we can make certain the federal bureaucracy improves the way it responsibly manages the use of these cards just like a private business would.

The cards in question are used by authorized federal employees for small-scale items needed for official business, such as office supplies, as well as travel cards, which are issued to federal employees to pay for official travel expenses.  When purchase cards are misused, taxpayer money is wasted.  When travel cards are misused and the bills aren’t paid, the government risks losing millions of dollars in rebates.

Problematic use of government charge cards – first at the Department of Defense and then at the Department of Housing and Urban Development, the U.S. Forest Service, the Federal Aviation Administration, and elsewhere – was revealed by my oversight work.  Over the years, the nonpartisan Government Accountability Office also documented fraudulent, questionable and overly expensive purchases with these cards.

My bipartisan reform bill won Senate approval as far back as 2009, but it took a continued effort to secure final passage this year.

Along with new controls and penalties, the legislative overhaul also will increase scrutiny of card usage with regular independent risk assessments and audits to identify fraud and improper use.  Here’s a more detailed summary of the Government Charge Card Abuse Prevention Act.

The required safeguards and internal controls include:

• performing credit checks for travel card holders and issuing restricted cards for those with poor or no credit to reduce the potential for misuse;

• maintaining a record of each cardholder, including single transaction limits and total transaction limits so agencies can effectively manage their cardholders;

• implementing periodic reviews to determine if cardholders have a need for a card;

• properly recording rebates to the government based on prompt payment, sales volume, etc.;

• providing training for cardholders and managers;

• utilizing effective systems, techniques, and technologies to prevent or catch improper purchases;

• establishing specific policies about the number of cards to be issued, the credit limits for certain categories of cardholders, and categories of employees eligible to be issued cards;

• invalidating cards when employees leave the agency or transfer;

• establishing an approving official other than the purchase card holder so employees cannot approve their own purchases;

• reconciling purchase card charges on the bill with receipts and supporting documentation;

• reconciling disputed purchase card charges and discrepancies with the bank according to the proper procedure;

• making purchase card payments promptly to avoid interest penalties;

• retaining records of purchase card transactions in accordance with standard government record keeping polices;

• utilizing direct payments to the bank when reimbursing employees for travel card purchases to ensure that travel card bills get paid;

• comparing items submitted on travel vouchers with items already paid for with centrally billed accounts to avoid reimbursing employees for items already paid for by the agency;

• submitting refund requests for unused airline tickets so the taxpayers don’t pay for tickets that were not used; and

• disputing unauthorized charges and tracking the status of disputed charges to proper resolution.

Monday, October 1, 2012