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Audit Finds DOT Travel Card Misuse

In fiscal 2012, U.S. Department of Transportation (DOT) employees spent $175 million using government-issued travel cards. Problem was, some employees given the cards spent a combined $183,000 on cash advances and $2.1 million on purchases unrelated to government travel, according to a new report from the agency’s Office of the Inspector General (OIG).

The problems appear to stem both from poor execution of auditing tools and employees’ overzealous use of travel cards, the report found.

“Program officials have access to an effective screening tool from the travel card provider; however, they do not use it because DOT’s travel management policy does not require them to do so,” the OIG noted in its audit report “Actions Needed To Enhance Controls Over Travel Cards.”

Mandated audit

The Government Charge Card Abuse Prevention Act of 2012 requires the OIG to perform periodic reviews of travel card programs. Its objective in conducting such audits is to determine whether the department’s internal controls are properly designed and implemented to prevent and detect travel card abuse or misuse.

As part of its work, the OIG selected two samples—a statistical sample of 400 cash advances from a universe of 48,554 transactions and a sample of 400 purchases from a universe of 890,132 transactions.

“These samples allowed us to project the total amount of cash advances and purchases, taken or made during fiscal year 2012, that were not related to government travel,” the OIG noted in its report. “We also tested for excessive cash advances and, due to inherent high risk, we expanded our review to include all 218 cash advances taken at casinos during fiscal year 2012.”

Lack of internal controls

JPMorgan Chase & Co. issues the department’s travel cards, which employees may use for such travel expenses as airline, hotels, meals and incidentals. The department used the General Services Administration’s SmartPay program to select Chase as its travel card provider.

According to the OIG report, DOT implemented effective controls to block purchases at merchants that do not provide travel services and to ensure delinquent cardholder accounts are held to a minimum.

“However, DOT lacks a robust system of internal controls to detect instances of travel card abuse and misuse, such as excessive cash advances, cash advances taken while not on government travel, and purchase misuse,” the report noted.

Misuse initially undetected

As such, program officials did not detect excessive cash advances obtained by agency cardholders. As a general rule, DOT’s travel card policy limits cash advances for a single trip to the total amount needed for meals and incidental expense, according to the report.

Also, DOT policy requires travelers to use their cards for all expenses related to official travel wherever accepted, unless otherwise exempted. However, the policy does not require program officials to review travel claims for excessive cardholder cash advances.

The OIG’s audit, however, found that 24 of 400 tested cardholder cash-advance transactions were excessive. For example, according to the report, a Federal Aviation Administration (FAA) cardholder traveled to Houston for three days and withdrew a $301 cash advance on the last day of the trip at an ATM located 40 miles from his residence.

“This advance exceeded the maximum … allowance by $123,” the OIG said. “In addition, the authorized … allowance for the last travel day was only $53.”

In another example, the OIG cited an FAA cardholder who traveled to Atlanta for four days and withdrew a $403 cash advance, which exceeded the maximum allowance by $151. “The traveler (also) should have considered the widespread acceptance of the card at restaurants before collecting this advance amount,” the audit report noted. “He used the card to purchase $227 of meals during this trip, which reduced his actual need for cash to no more than $25.”

Rebates affected

Excessive cash advances reduce the amount of rebates DOT receives from Chase for purchases because cardholders are using cash rather than their government credit cards for purchases, the audit report noted. “Also, the lack of controls for detecting excessive cash advances also increases the risk that cash advances are used for expenses unrelated to government travel,” the OIG said in its audit report.

Program officials also did not identify all instances of purchase misuse. “While DOT has effective internal controls to prevent cardholders from making purchases at non-travel related businesses, it lacks an automated control to help program officials identify when cardholders are making purchases while not on government travel, which is prohibited by DOT’s Travel Card Policy,” the report noted.

Misuse for purchases

Eight of the 400 fiscal 2012 cardholder purchases tested were made by employees who were not on government travel and were not detected by program officials. The total value of those purchase was estimates $2.1 million, according to the report.

Among the examples cited in the report were a Federal Motor Carrier Safety Administration employee made a $550 purchase at a recreational vehicle resort in Tampa, and an FAA employee who made a $97 supermarket purchase at a store located 18 miles from her residence.

“Because DOT lacks an automated control, program officials must manually compare cardholder purchases to cardholder reimbursement claims to identify unauthorized purchases,” the report noted. “This labor-intensive process is both costly and ineffective.”

To illustrate, FAA spent $684,000 to review the propriety of more than 1 million travel card transactions during fiscal 2012, the OIG said in its report.

Remedy recommendations

To address the department’s travel card programs, the OIG suggested that the assistant secretary for budget and programs and chief financial officer develop and implement controls to detect employees obtaining excessive cash advances. It also suggested providing program officials with quarterly Intellilink reports to help identify cardholder cash advances taken while not on government travel and develop other cost-beneficial methods to detect unauthorized cash advances.

The OIG also suggested the development and implementation of automated controls to detect unauthorized cash advances and purchases. It also recommended that the FAA’s assistant administrator for finance and management work with the department to implement an automated solution that “reduces the costs associated with the labor-intensive process of comparing cardholder travel card activity to travel claims.”

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