The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited HUD’s compliance with the purchase card program requirements for fiscal years 2017 and 2018 based on our risk assessment. Our audit objective was to determine whether HUD maintained accurate records of cardholders and transactions; HUD employees took purchase card training when required; and HUD purchase cards were used for illegal, improper, or erroneous transactions.
HUD did not have accurate and complete records of cardholders and transactions, including errors in cardholder closure dates, errors in training dates, inadequate tracking of merchant category code (MCC) overrides, and incomplete transactional data. In addition, purchase cardholders and approving officials did not always take purchase card training when required. Further, we identified 10 instances in which HUD purchase cards were used for improper purchases and incurred improper interest charges totaling $29,423.
We recommend that the Chief Procurement Officer (1) implement processes to periodically audit or reconcile the shared service provider’s records, (2) review hierarchies, (3) ensure that training is taken when required, (4) suspend cardholders or approving officials who fail to take training or repeatedly cause HUD to pay interest, and (5) research the incomplete monthly transactional data and identify a solution. In addition, we recommend that the Chief Procurement Officer (1) enhance the process to periodically analyze data for split transactions or improper MCCs, (2) improve notifications to employees, and (3) follow up on any potential issues identified.
Recommendations
Chief Procurement Officer
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Status2020-KC-0001-001-AOpenClosedClosed on Octubre 24, 2022
Implement a process to periodically audit or reconcile ARC’s records.
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Status2020-KC-0001-001-BOpenClosedClosed on Mayo 18, 2020
Implement a process to periodically review approving officials’ span of control to ensure that the requirement is not exceeded.
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Status2020-KC-0001-001-COpenClosedClosed on Mayo 18, 2020
Implement a process with ARC to ensure that cardholders and approving officials are notified before purchase card training is due to allow training to be completed in a timely manner.
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Status2020-KC-0001-001-DOpenClosedClosed on Mayo 18, 2020
Implement a process to ensure that purchase cards are suspended when a cardholder or approving official fails to complete training.
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Status2020-KC-0001-001-EOpenClosedClosed on Mayo 18, 2020
Research why ARC provided incomplete monthly transactional data and identify a solution to ensure the completeness of future transmissions.
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Status2020-KC-0001-002-AOpenClosedClosed on Octubre 24, 2022
Enhance the process to periodically analyze data for split transactions or improper MCCs and follow up on any potential issues identified.
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Status2020-KC-0001-002-BOpenClosedClosed on Mayo 18, 2020
Require ARC to update its MCC tracking log, to include the amount, the date of MCC override removal, and staff assigned, to ensure that an override is removed after the approved purchase is made.
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Status2020-KC-0001-002-COpenClosedClosed on Mayo 18, 2020
Implement a process with Citibank and ARC to provide global notifications to cardholders and approving officials before autoclosures of credit card statements.
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Status2020-KC-0001-002-DOpenClosedClosed on Mayo 18, 2020
Implement a process to suspend cardholders or approving officials who repeatedly cause HUD to pay interest.
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Status2020-KC-0001-002-EOpenClosed$1,807.00Questioned Costs
Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.
Closed on Mayo 18, 2020Obtain supporting documentation for the $1,807 spent on two cardholders’ purchase cards or require the vendors or cardholders to repay the funds to the applicable HUD program.