oversight

Improvements Are Needed in the Denali Commission Government Travel Program

Published by the Denali Commission, Office of Inspector General on 2018-09-01.

Below is a raw (and likely hideous) rendition of the original report. (PDF)

September 28, 2018

MEMORANDUM FOR:                  John Torgerson
                                 Interim Federal Co-Chair, Denali Commission




FROM:                            Mark H. Zabarsky
                                 Principal Assistant Inspector General for Audit and Evaluation
                                 Department of Commerce Office of Inspector General

SUBJECT:                         Improvements Are Needed in the Denali Commission Government
                                 Travel Program—Final Report No. DCOIG-18-004-A

This memorandum provides our final report on the Denali Commission’s (the Commission)
travel program. 1 Our audit objective was to determine whether the Commission has adequate
internal control over its travel program to ensure that federal funds are being appropriately
managed.

We did not identify any instances of significant misuse of the travel card; however, it was
determined that the Commission could improve its compliance with the Federal Travel
Regulation.

We received the Commission’s response to our draft report on September 11, 2018 and
included the response as an appendix in our final report. The final report will be posted on the
Denali Commission Office of Inspector General’s website pursuant to sections 4 and 8M of the
Inspector General Act of 1978, as amended (5 U.S.C. App., §§ 4 & 8M).

We would like to thank the Commission staff for their cooperation and courtesies extended to
us during the audit. Please contact me at (202) 482-3884 if you would like to discuss the results
of this review.

Attachment

cc:     Denali Commission Commissioners
        Corrine Eilo, Chief Financial Officer, Denali Commission
        Peggy E. Gustafson, Inspector General, U.S. Department of Commerce




1
 The Department of Commerce Office of Inspector General (OIG) provides oversight services to the Denali
Commission through a Memorandum of Understanding between the agencies.
Denali Commission

Improvements Are Needed in the Denali
Commission Government Travel Program




                                     FINAL REPORT

                                September 28, 2018

                                    DCOIG-18-004-A

                                 DENALI COMMISSION
                        OFFICE OF INSPECTOR GENERAL
Denali Commission                                                                                                                   Office of Inspector General



     Contents

     Introduction .................................................................................................................................................. 1
     Objective, Finding, and Recommendation .................................................................................................... 2
        The Commission Could Improve Its Compliance with the FTR ........................................................................ 2
        Recommendation ...................................................................................................................................... 3
     Summary of Agency Response and OIG Comments ................................................................................... 4
     Appendix A: Objective, Scope, and Methodology ........................................................................................ 5
     Appendix B: Agency Response ..................................................................................................................... 7
Denali Commission                                                                   Office of Inspector General



     Introduction

     The Denali Commission Act established the Commission in 1998 as a federal agency with the
     statutory purpose of providing job training and economic development services, rural power
     generation and transmission facilities, modern communication systems, water and sewer
     systems, and other infrastructure needs to rural areas of Alaska. To fulfill this mission,
     employees of the Commission may be required to use temporary duty travel for various
     purposes such as grant planning, site visits, conference attendance, and training.

     The Commission uses the travel management system Concur to create and maintain
     documentary support for temporary duty travel and local travel. To manage temporary duty
     travel, travelers create travel authorizations in Concur, which then automatically routes the
     authorization requests to an authorized examiner and approving official for approval. Travelers
     are responsible for booking their own transportation, hotels, and anything else necessary to
     facilitate their travel. After trips are completed, travelers create vouchers in Concur to claim
     expenses and add supporting documentation. Concur routes the vouchers to the authorized
     examiners and approving officials for approval. Once vouchers receive final approval, travelers
     are reimbursed for their expenses.
     The General Services Administration’s (GSA’s) Federal Travel Regulation (FTR) implements the
     various statutory requirements and executive branch policies for travel at government expense
     by federal civilian employees and other authorized individuals. The purpose of the FTR is to
     interpret statutory and other policy requirements in a manner that balances the need to assure
     that official travel is conducted in a responsible manner with the need to minimize
     administrative costs and communicate the resulting policies in a clear manner to federal
     agencies and employees. The FTR, which places restrictions on both government contract
     carrier and chartered air travel, requires travelers to use contract carriers when available—
     unless appropriate justifications and approvals for using non-contract carriers are expressly
     included in the travel authorization. 2 In addition, the FTR classifies a chartered air service as a
     government aircraft and requires prior written authorization for all travelers on a government
     aircraft on a trip-by-trip basis. Specifically, the head of agency and non-federal travelers require
     the head of legal to authorize the trip, while all other federal travelers require the designated
     travel-approving official to authorize the trip. 3
     The Commission asserted it uses chartered air services to fly to rural Alaska when there are
     multiple travelers on the same trip as it is more cost effective to charter a plane than purchase
     individual seats on a commercial carrier.




     2
         FTR §§ 301-10.106-107.
     3
         FTR §301-70.803.


     FINAL REPORT NO. DCOIG-18-004-A                                                                     1
Denali Commission                                                                 Office of Inspector General

     Objective, Finding, and Recommendation
     Our audit objective was to determine whether the Commission has adequate internal controls
     over its travel program to ensure that federal funds are being appropriately managed. We did
     not identify any instances of significant misuse of the travel card; however, we determined that
     the Commission could improve its compliance with the FTR.

     We reviewed the FTR and GSA’s SmartPay guidance and training for government travel cards.
     In addition, OIG interviewed agency officials such as the Commission’s travel
     Agency/Organization Program Coordinator (A/OPC), examining officials, and approving officials
     to obtain an understanding of the Commission’s process and identify key internal controls. OIG
     assessed these key controls by selecting a judgmental sample of 42 of 966 travel card purchases
     and a random sample of 36 of 172 temporary duty travel trips during the period of October 1,
     2015, to March 31, 2017. 4 For both samples, OIG conducted detailed reviews of travel
     authorizations, travel vouchers, and supporting documentation such as invoices and receipts in
     order to determine whether the Commission was compliant with federal regulations and
     federal funds are being appropriately managed. Appendix A further details the objective, scope,
     and methodology of the audit.

     The Commission Could Improve Its Compliance with the FTR
     Based on our sample of 36 temporary duty travel trips, we found that 12 trips included air
     travel that was not adequately justified and approved. The FTR requires travelers to use
     contract carriers when available, unless appropriate justifications and approvals for using non-
     contract carriers are expressly included in the travel authorization. 5 In addition, the FTR
     classifies chartered air services as a government aircraft and generally requires prior written
     authorization or approval for all travelers on a government aircraft on a trip-by-trip basis. 6
     We identified 9 travel vouchers used a non-contract fare instead of a GSA contract carrier for
     air travel. For each voucher, we determined that the purpose and location of the travel was
     valid. Although we determined that the use of the non-contract fare met the exemptions listed
     in the FTR, the Commission neither required approval on the travel authorization nor showed
     evidence that the use was advantageous to the government.

     After performing a cost analysis to compare the commercial flights purchased with the GSA
     city-pair contract fares for those routes, we determined that use of a non-contract fare
     resulted in an overall lower cost to the government. According to the FTR, using a non-
     contract carrier is an authorized exception when the lower fare results in a lower total trip
     cost to the government. Among the FTR’s requirements for use of a non-contract fare is that
     the travel authorization must show agency approval of the non-contract fare and that the
     Commission must determine that the proposed transportation was practical and cost effective. 7
     However, for the 9 vouchers we reviewed, there was no evidence of the required approval or


     4
       See Appendix A for sampling methodology.
     5
       FTR §301-10.106.
     6
       FTR §301-70.803.
     7
       FTR §301-10.108.


     FINAL REPORT NO. DCOIG-18-004-A                                                                    2
Denali Commission                                                                  Office of Inspector General

     the Commission’s determination that the use of the non-contract fares were practical or cost
     effective for the Government.
     Furthermore, the remaining three trips used chartered air services that did not have the
     necessary justifications and approvals on the travel authorizations as required by the FTR. 8
     Although all three authorizations were for different travelers on the same trip, we determined
     that the approved travel was for a valid purpose and temporary duty location. The trip was to a
     remote Alaska village where a GSA city-pair contract fare was not available. Based on the
     location and available commercial flights, we determined that the travelers used the most
     economical method available.
     During OIG interviews, the Commission’s approving officials stated that they were not aware
     of the FTR requirements pertaining to the use of non-contract carriers and chartered air
     services even though they have attended relevant FTR training.

     Adequately justifying and approving all travel authorizations in compliance with the FTR will
           •   help improve internal control over temporary duty travel,
           •   improve transparency of official government travel, and
           •   reduce the risk of federal funds being used inappropriately.

     Recommendation
     We recommend that the interim Federal Co-Chair of the Commission direct Commission
     travel oversight officials to ensure that non-contract carrier and chartered air service travel are
     properly justified and approved in accordance with the FTR.




     8
         FTR §301-70.803.


     FINAL REPORT NO. DCOIG-18-004-A                                                                   3
Denali Commission                                                            Office of Inspector General

     Summary of Agency Response and OIG Comments

     The OIG received the Commission’s response to the draft report, which we have included as
     appendix B of this final report. The Commission concurs with the finding and recommendation
     in this report. In its response, the Commission detailed the actions it plans to take to
     implement our recommendations. We believe the actions detailed in the agency response are
     sufficient and therefore no corrective action plan is required.




     FINAL REPORT NO. DCOIG-18-004-A                                                               4
Denali Commission                                                                  Office of Inspector General

     Appendix A: Objective, Scope, and Methodology
     The objective was to determine whether the Commission has adequate internal control over
     its travel program to ensure that federal funds are being appropriately managed. We conducted
     fieldwork from April 2017 through January 2018 in Anchorage, Alaska.

     To accomplish the audit objective, we:
         •    Communicated with Commission officials and administrative support personnel to gain
              an understanding of the travel program processes and procedures.
         •    Requested, obtained, and analyzed the Commission’s history of travel card transactions
              and temporary duty travel between October 1, 2015, and March 31, 2017.
         •    Obtained a sample of travel card transactions. For the audit review period of October
              1, 2015, through March 31, 2017, we performed a judgmental sample based on a risk
              analysis that identified purchases flagged for risk due to transactions made outside
              periods of authorized travel, suspicious merchant category codes, and no name listed on
              the transaction. The risk analysis resulted in a sample of 42 of 966 total travel card
              purchases chosen for review.
         •    Reviewed supporting documentation for the sample of 42 purchase card transactions,
              which included the corresponding travel authorizations and vouchers, city of purchase,
              merchant name, merchant category code, available receipts, travel cardholder
              justification, and any other related documentation.
         •    Obtained a sample of temporary duty travel. For the audit review period of October 1,
              2015–March 31, 2017, a random sample of 36 of 172 total temporary duty travel
              vouchers was chosen for review.
         •    Reviewed supporting documentation for the sample of 36 temporary duty travel
              vouchers, which included the travel authorizations, travel vouchers, receipts, approvals,
              and any other related documentation.
         •    Obtained and analyzed active cardholders, users, and system permissions for each user
              from the online travel card management system.
         •    Requested, obtained, and analyzed the template of merchant category codes used to
              initiate all new travel cards.

     For the review of the travel program, we relied on computer-generated data from the online
     travel system and the online travel card management system. We established data reliability by
     comparing travel authorizations in the travel system to the corresponding travel vouchers and
     supporting documents. In addition, we compared travel card transaction supporting
     documentation to the list of transactions from the online travel card management system. We
     also verified active cardholders, account users, and system permissions by discussing with the
     A/OPC to ensure all cardholders and users are still employed and necessary as well as the
     validity of system permissions based on job duties. Based on this review, we determined the
     data used were sufficiently reliable to support audit conclusions.




     FINAL REPORT NO. DCOIG-18-004-A                                                                      5
Denali Commission                                                                   Office of Inspector General

     During the review, we identified deficiencies in the Commission’s internal control that are
     significant within the context of the audit objectives by interviewing officials, reviewing policies
     and procedures, reviewing travel card and temporary duty travel documentation, and reviewing
     user access, system permissions, and travel card templates in the online purchase card
     management system. As described in the findings, procedural and documentary controls are
     insufficient to certify that temporary duty travel is being justified and approved in compliance
     with the FTR. During the review, we identified instances of possible violations in the audit and
     referred the activity to the Department of Commerce Office of Inspector General, Office of
     Investigations.

     We performed this review under authority of the Inspector General Act of 1978, as amended,
     5 U.S.C. App. We conducted this performance audit in accordance with generally accepted
     government auditing standards. Those standards require that we plan and perform the audit to
     obtain sufficient, appropriate evidence to provide a reasonable basis for our findings and
     conclusions based on our audit objectives. We believe that the evidence obtained provides a
     reasonable basis for our findings and conclusions based on our audit objectives.




     FINAL REPORT NO. DCOIG-18-004-A                                                                    6
Denali Commission                      Office of Inspector General

     Appendix B: Agency Response




     FINAL REPORT NO. DCOIG-18-004-A                       7
                   DENALI COMMISSION
                   OFFICE OF INSPECTOR GENERAL
                   1401 Constitution Ave NW
                   Washington DC 20230

                   www.oig.denali.gov




FINAL REPORT NO. DCOIG-18-004-A                  8