oversight

Controls over Purchase Card Use.

Published by the Department of Education, Office of Inspector General on 2006-04-07.

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

                           UNITED STATES DEPARTMENT OF EDUCATION

                                OFFICE OF INSPECTOR GENERAL


                                            400 MARYLAND AVENUE, S.W.
                                             WASHINGTON, DC 20202-1500




                                                         April 7, 2006

                                                                                                  Control Number
                                                                                                  ED-OIG/A19E0018

William McCabe, Acting Chief Financial Officer
Office of the Chief Financial Officer
U.S. Department of Education
Office of the Chief Financial Officer
400 Maryland Avenue, S.W.
Washington, D.C. 20202

Dear Mr. McCabe:

This Final Audit Report, entitled Department of Education Controls over Purchase Card Use,
presents the results of our audit. The purpose of the audit was to (1) determine whether
recommendations from prior purchase card reviews were implemented, and (2) assess the current
effectiveness of internal control over the purchase card program and the appropriateness of
current purchase card use. Our review included purchases made by Washington, DC,
cardholders during the period July 1, 2003, through June 30, 2004.




                                                   BACKGROUND



The Government purchase card is a less costly and more efficient way for offices and
organizations to purchase needed goods and services directly from vendors. The purchase card
eliminates the need to process purchase requests through procurement offices and avoids the
administrative and documentation requirements of traditional contracting processes. The
Department of Education (Department) selected Bank of America to provide purchase card
support and services.

The Office of the Chief Financial Officer (OCFO), Contracts and Acquisitions Management
(CAM), coordinates the purchase card program within the Department and acts as the liaison
with Bank of America. Executive Officers are responsible for administering the purchase card
program in individual Principal Offices (POs). Approving Officials (AOs) and Alternate
Approving Officials (AAOs) are appointed by the Executive Officers and are the primary
officials responsible for authorizing cardholder purchases and ensuring timely reconciliation of
cardholder statements.

          Our mission is to promote the efficiency, effectiveness, and integrity of the Department’s programs and operations.
Final Report
ED-OIG/A19E0018                                                                       Page 2 of 15

On October 13, 2000, the Office of Inspector General (OIG) issued a report entitled, Results of
the OIG Review of Internal Controls Over the Use of Purchase Cards and Third Party Drafts
(Control Number A&I 2000-15). OIG reported a number of weaknesses in internal control over
purchase cards, including that cardholders did not always maintain documentation to support
purchases, approving officials did not always document review of purchase card statements,
procurement staff were not fully aware of their responsibilities, Department guidelines needed to
be updated, and training needed to be improved. In FY 2001 and FY 2002, OIG conducted
additional reviews and found the Department had taken corrective actions to address the issues
noted in the prior reviews. In the most recent audit report, issued April 2002, OIG made
recommendations in two additional areas – to reduce the numbers of cardholders assigned to
each AO, and to develop guidelines and conduct on-site internal control reviews of purchase card
activity. (See Attachment 1 for a summary of prior OIG reports issued.)

We performed this audit to assess the effectiveness of the current controls over the purchase card
program. We also followed up on the additional recommendations made in the April 2002 audit
to determine whether corrective actions had been implemented. Our audit work assessed the
effectiveness of corrective actions taken as a result of the prior OIG reviews and identified
whether further corrective action was needed to address any previously reported internal control
weaknesses. As part of this audit, we issued 16 reports to PO officials to address issues noted in
the PO-level reviews. (See Attachment 2 for a list of PO-level reports issued.) This report
summarizes the results of all work performed and presents recommendations to improve overall
management of the purchase card program.




                                     AUDIT RESULTS



We found OCFO had improved controls over the program and implemented corrective actions in
response to the prior OIG reviews, with one exception. In April 2002, OIG recommended that
OCFO develop guidelines and conduct on-site reviews of purchase card activity. We found this
action was taken for a limited period only, with the last review conducted in July 2002. While
CAM performs quarterly reviews of selected purchase card activity, CAM staff stated they do
not have the resources to perform on-site reviews.

To address our second objective, we reviewed transactions made by Headquarters cardholders
across 16 POs. We did not identify any inappropriate purchases – purchases that appeared to be
for personal use, or for other than the official business of the Department. However, we found
internal control over documentation required to support purchases should be improved. This
issue was also included in the OIG report issued October 13, 2000. As a result, the Department’s
assurance that purchases were appropriate and were made in accordance with Federal regulations
and Department policies and procedures is reduced. Failure to document receipt of goods and
services could result in payment for items that were ultimately not provided to the Department.
Approving purchases without reviewing adequate supporting documentation increases the
Department’s vulnerability to potential misuse or waste of government resources.
Final Report
ED-OIG/A19E0018                                                                         Page 3 of 15

In its response to the draft audit report, OCFO concurred with the recommendations and
provided a proposed corrective action plan to address each recommendation. The complete text
of OCFO’s response is included as Attachment 6 to this audit report.


Finding – The Department Needs To Improve Internal Control to Ensure Required
Documentation Is Obtained and Maintained to Support Purchase Card
Transactions

We found cardholders did not obtain and maintain required documentation to support purchases
in 239 of the 359 transactions reviewed (67 percent). Specifically,

      •   62 purchases (17 percent) were not supported by a written request,
      •   17 purchases (5 percent) were not supported by a record of purchase, and
      •   191 purchases (54 percent) were not supported by a record of receipt. 1

We also found cardholders did not have documentation of special clearances or approvals
required for 15 purchases of advertisements, furniture, and software. See Attachment 4 for the
numbers of transactions reviewed for each PO, and Attachment 5 for the error rate in each office
reviewed.

Department Directive (Directive) OCFO: 3-104, Government-wide Commercial Purchase Card
Program, dated January 23, 2002, Section VI, defines cardholder and AO responsibilities. The
Directive states,

          H. The Cardholder is responsible for . . . 2. Purchasing goods or services in
          accordance with established Department policy, procurement regulations, and
          individual internal office procedures . . . 6. Providing documentation to support
          purchases for AO approval and official record keeping. This documentation
          includes receipts, invoices, logs, etc.

          F. An Approving Official (AO) is responsible for . . . 6. Reviewing, validating, and
          approving for payment the Cardholder's reconciled bank statement each billing
          cycle . . . 14. Reviewing all management reports of Cardholder activity under his or
          her authority . . . 15. Reviewing appropriateness of purchases. This includes
          determining individual purchases are appropriate, that the goods or services were
          properly received and accepted, and that the payment was proper. . . .

Section VII.A.7 of the Directive further states, “The Cardholder should secure a written request
(email or requisition) from the appropriate Department employee requesting the Cardholder to
procure goods or services.”

OCFO Procedure CO-097, Procedure for Buying, Using a Government Commercial Purchase
Card, revised March 2003, Section 10.d, states,


1
    Some purchases were missing more than one of the required documents.
Final Report
ED-OIG/A19E0018                                                                                Page 4 of 15

        Retain data supporting the purchases (including records of oral quotations). Keep
        your files neat, up-to-date, and easily retrievable. Documentation will be retained
        in a central filing location established by your Principal Office. The record
        should be kept for 3 years after final payment. The records must be kept secure
        and be easily retrievable upon request. Documentation includes:
          •	 Request for purchase (a written request from the requisitioner).
          •	 Record of purchase (i.e. written notes, printout of [Contracts and Purchasing
             Support System] CPSS Quick Purchase screen, invoice, internet printout,
             etc.).
          •	 Record of receipt and acceptance (i.e. packing slip, training certificate).

Section VII.A.9 of the Directive provides examples of categories requir ing special reviews or
clearances including, “b. Paid advertisements – authority to publish advertisements in
newspapers and periodicals require clearance by the Director, CPO.”2

Departmental Directive OM 4-103, Space Management, revised July 30, 2002, outlines guidance
on the acquisition of furniture. Section VI, Part C.4 states,

        The Principal Officers are responsible for . . . 4. Assuring that all furniture
        procurement is through, coordinated and approved by [OM Facilities Services]
        OM/FS in order to insure these products meet the minimum standards and are
        interchangeable (i.e. connectivity, parts, style, color, etc.) with our existing
        inventory, and comply with departmental contracting policy and procedures.

Office of the Chief Information Officer (OCIO) Handbook OCIO-08, Handbook for Software
Management and Acquisition Policy, dated August 25, 2003, outlines procedures and
requirements for software acquisition. Section VI, Part A, states,

        Requisitions for software and upgrades will be submitted to OCIO by the
        Contracts and Purchasing Support System (CPSS) for approval, and upon award,
        delivery and receipt by the [Contracting Officer] CO, registered in the Software
        Library.

We found cardholders and AOs were not always familiar with, or inconsistently applied,
Department requirements. The Department Directive did not include information on how special
clearances should be obtained for required items. Some cardholders maintained additional files
and did not include all documentation in the purchase card files and reconciliation packages
provided to the AOs. We also found AOs did not ensure cardholders obtained and maintained
complete supporting documentation prior to approving the statements for payment.

Web-based refresher training was provided for purchase cardholders, AOs, and other staff with
responsibilities in the program. However, this training was required only every two years, and
did not include an exam or other assessment as to whether the participants understood the
information prior to providing credit for completing the course.


2
 CPO, or Contracts and Purchasing Operations, is now known as Contracts and Acquisitions Management, or
CAM.
Final Report
ED-OIG/A19E0018                                                                       Page 5 of 15

We reviewed the training records for 128 Headquarters staff participating in the program and
found 5 staff did not complete the refresher training when required. Specifically, three
cardholders, one AAO, and one former Executive Officer, did not complete the refresher training
within the two- year period. CAM staff stated that reminders are sent when training is due, and
added that the former Executive Officer noted refused to take the required refresher training.
One of the cardholders noted has changed positions, and is no longer a cardholder, but was
overdue for training at the time she changed positions. The remaining two cardholders and AAO
have now completed the refresher training. CAM did not suspend the purchase card activities for
these staff when required training was not completed.

While OCFO’s Purchase Card Program Review Plan included quarterly reviews of purchase
card transactions, CAM did not always request documentation supporting purchases. Rather,
CAM staff sent emails to cardholders requesting explanations or more information on
questionable purchases identified for review. If the email explanation was sufficient, supporting
documentation may not have been requested. In response to the prior OIG audit issued in April
2002, OCFO agreed to develop guidelines and conduct on-site internal control reviews. CAM
staff confirmed that another group in OCFO conducted the reviews of purchase card activity,
including on-site visits and review of cardholder files. CAM staff stated the last of these reviews
was conducted in July 2002. As such, OCFO staff have not been evaluating compliance by the
cardholders in obtaining and maintaining required documentation, and by AOs in ensuring
purchases are supported by required documentation.

Lack of adequate supporting documentation reduces the Department’s assurance that purchases
were appropriate and were made in accordance with Federal regulations and Department policies
and procedures. Failure to document receipt of goods and services could result in payment for
items that were ultimately not provided to the Department. Approving purchases without
reviewing adequate supporting documentation increases the Department’s vulnerability to
potential misuse or waste of government resources.

Failure to document required approvals for advertisements, furniture, and software purchases
reduces assurance that such approvals were obtained. Purchases made without such approvals
could result in improper expenditure of funds, or in expenditure of funds for items that are not
compatible with current configurations, or that are already available for use within the
Department. In addition, independent purchase of these items could result in higher costs if
established contracts or Department sources are not used.


Recommendations

We recommend the Acting Chief Financial Officer:

   1.	 Require training on an annual basis for cardholders, AOs, Executive Officers, and other
       staff involved in the program.

   2.	 Modify the web-based training program to include additional emphasis on documentation
       requirements, and include an exam to demonstrate that participants understand the
       information presented prior to allowing credit for completing the course.
Final Report
ED-OIG/A19E0018                                                                                      Page 6 of 15

      3.	 Establish a process to monitor the completion of refresher training to ensure cardholders,
          AOs, Executive Officers, and other staff involved in the program meet requirements.
          Suspend accounts and/or participation in the program for staff who have not satisfied
          training requirements.

      4.	 Include in the Department Directive additional information on the process for obtaining
          special clearances for purchases of advertisements, furniture, software, or other items,
          and refer to OM, OCIO, and other directives, as appropriate.

      5.	 Request and review documentation for all transactions identified and selected under the
          Purchase Card Program Review Program to allow evaluation of cardholder and AO
          performance in ensuring required documentation is obtained and maintained to support
          purchases. Communicate the results of internal reviews back to Executive Officers
          and/or Senior Officials to ensure corrective actions are taken as appropriate.

      6.	 Develop and implement a program to reinstitute the on-site reviews of purchase card
          activity previously agreed to in response to the April 2002 OIG audit.


OCFO Comments:

In its response to the draft audit report, OCFO concurred with the recommendations and
provided a proposed corrective action plan to address each recommendation. The complete text
of the OCFO’s response is included as Attachment 6 to this audit report.




                                             OTHER MATTERS



Department Needs to Continue to Monitor Unreconciled Items

Prior to our audit, OCFO had not consistently provided detailed information to PO staff on
purchase card transactions that had not been reconciled. OCFO Financial Management
Operations (FMO) staff are responsible for this area. CAM staff stated when FMO sent reports
containing the current month's transactions, many POs believed the old items had been addressed
since the transactions did not appear on the report. From discussions with cardholders, CAM
staff found cardholders were not always aware they could change a drop-down menu in CPSS to
show all unreconciled items, but added that recent updates to CPSS resulted in the default setting
showing all transactions.

On February 23, 2005, FMO began providing monthly detailed lists to PO staff that included all
unreconciled transactions since July 2001. This listing was provided to cardholders, AOs, and
Executive Officers, and included a total of 1,069 debit and credit transactions with a combined
value of $293,450. 3 As of November 2005, the report sent to PO staff included a total of 30

3
    Values presented do not net debits and credits as each represents an unreconciled transaction.
Final Report
ED-OIG/A19E0018                                                                         Page 7 of 15

undisputed, unreconciled debit and credit transactions with a combined value of $9,252. This
represents a 97 percent decrease in both the number and value of unreconciled transactions.

While this represents a significant improvement, we suggest that OCFO continue to provide
detailed information to cardholders, AOs, and Executive Officers, on purchase card transactions
that have not been reconciled, and continue to work with PO staff to resolve outstanding items.
Further, we suggest that OCFO establish a process to suspend cardholder accounts for items that
have not been reconciled for 120 days.


Timeframes for Reconciliation Were Not Consistent

We also noted timeframes for reconciliation established in the Directive were not consistent with
deadlines established in notices sent by OCFO with statement transactions for reconciliation.
Section VII.B of the Directive requires cardholders to reconcile the statement with their records
and obligations in the financial system, and forward the reconciled statement and all supporting
documentation to the AO within five working days. The Directive requires the AO to review
and approve the statement within 5 working days of receipt from the cardholder, but no later than
15 calendar days from the statement date. Finally, the Directive states the designated billing
office (OCFO) shall receive all authorized (reconciled) transactions by the fifth calendar day of
the month following the statement date.

We reviewed the reconciliation notices sent by OCFO during the scope of our review and found
cardholders were allowed an average of 11 working days from the date of the email notices to
complete reconciliation activities. AOs were allowed an average of an additional three working
days to complete their tasks. Overall, an average of 14 working days was allowed from the date
the email notice was sent. The timeframes allotted the cardholders far exceeded those
established by the Directive, and AOs were expected to complete their duties in less time. The
timeframes established did not in any instance require completion of all reconciliation activities
within 15 calendar days of the statement date, or provide all reconciled transactions by the 5th
day of the month following the statement date.

We suggest OCFO either ensure notices sent follow the timelines in the Directive, or modify the
Directive to reflect tha t deadlines will be established in the reconciliation notices sent by OCFO.
We further suggest that OCFO establish a process whereby cardholder accounts are suspended
when accounts are not reconciled timely on a recurring basis.




                  OBJECTIVES, SCOPE, AND METHODOLOGY



The objectives of our audit were to (1) determine whether recommendations from prior purchase
card reviews were implemented, and (2) assess the current effectiveness of internal control over
the purchase card program and the appropriateness of current purchase card use.
Final Report
ED-OIG/A19E0018                                                                      Page 8 of 15

To accomplish our objectives, we performed a review of internal control applicable to the
Department’s administration and management of its purchase cards, as well as any additional
controls established by individual POs. We evaluated the prior Department-wide and PO-level
OIG reviews of the purchase card program, and prior reviews of the Department’s purchase card
program conducted by the Government Accountability Office, to determine issues previously
reported. We evaluated corrective actions taken by the Department in response to the
recommendations in the OIG reports. We reviewed requirements related to the purchase card
program in the Treasury Financial Manual, Federal Acquisition Regulation, Office of
Management and Bud get circulars and memoranda, and Bank of America’s contract and task
order. We reviewed guidelines and information on the purchase card program provided by the
General Services Administration. We evaluated audit/review guidelines issued by the
Government Accountability Office and the President’s Council on Integrity and Efficiency. We
also reviewed Departmental Directives, OCFO procedures, and internal PO- level guidance
applicable to the purchase card program.

We conducted interviews with OCFO officials to obtain information and an understanding of the
purchase card program. In each PO reviewed, we conducted interviews with PO-level managers,
Executive Officers, cardholders, and AOs, as appropriate. We reviewed PO-level policies and
procedures for compliance with Department policies and procedures. We also reviewed training
records for staff participating in the program. To test controls and evaluate the appropriateness
of purchase card use, we reviewed supporting documentation provided by PO-level staff for
purchases made during the scope period noted below.

The scope of our review included purchases made by Washington, DC (Headquarters)
cardholders during the period July 1, 2003, through June 30, 2004. We identified a total of 6,474
purchases valued at $2,842,648 as within our scope. (See Attachment 3 for detail on the
numbers of transactions and value of purchases for each PO reviewed.) We did not include in
our review any purchases made by the various boards and commissions that participate in the
Department’s purchase card program, because these organizations do not represent a high
volume of purchases, and the staff are not considered Department employees.

We used sampling and data mining to select purchases for review. From the universe of
purchases made by Department Headquarters cardholders, we randomly selected purchases of
$50 or more for review. The random sample was chosen to provide a representative review of
purchases across the Department. We also identified high-risk categories of potentially
inappropriate purchases and reviewed all transactions in those categories – purchases over
$2,500, charges to blocked merchant category codes (MCCs), and potential weekend purchases.

Department-wide, we reviewed 280 transactions in the random sample, all 11 purchases over
$2,500, and all 27 charges to blocked MCCs. We also reviewed all 41 potential weekend
purchases for the first PO reviewed. However, we determined the date of the transactions
resulted from posting delays in the Bank of America system, and that no purchases were actually
made on a weekend. Further review of potential weekend purchases was not pursued in
additional POs. In total, we reviewed 359 purchases totaling $300,822 in 16 POs to evaluate the
effectiveness of internal control and the appropriateness of purchase card use. (See Attachment
4 for details on the numbers of transactions in each category reviewed in each PO.) Our sample
represented 6 percent of the total number and 11 percent of the total dollar value of purchases
within our scope period. Since we did not identify any inappropriate purchases in our audit, we
Final Report
ED-OIG/A19E0018                                                                     Page 9 of 15

have not projected the results of our sample to the universe. However, we believe the results
clearly demonstrate that improvements are needed in the Department’s internal control over the
purchase card program, specifically in the area of documentation required to support purchases.

We also evaluated the universe of transactions for potential split purchases. We identified from
the universe all purchases within seven calendar days from the same vendor by the same PO, and
for which the total amount of the purchases exceeded $2,500. This analysis was done to identify
any purchases that may have been split into more than one transaction to avoid the $2,500
micropurchase limit. Since training charges were not considered split purchases, we eliminated
transactions to known training vendors. Our analysis identified a total of 187 transactions that
could be split purchases. In our individual PO revie ws, we evaluated these transactions and
supporting documentation to determine whether purchases were split to avoid the micropurchase
threshold. We identified 8 purchases, or 16 transactions, in this category. These transactions
represent 0.2 percent of the total transactions in our universe, and are therefore considered
immaterial to this audit report. These purchases were reported and corrective actions
recommended in the PO-level reports.

We relied on computer-processed data initially obtained from Bank of America’s Electronic
Account Government Ledger System to select cardholder purchases made during the scope
period. This data was also recorded in the Department’s Contracts and Purchasing Support
System and reconciled by PO and OCFO staff through Education’s Central Automated
Processing System. We verified the completeness and accuracy of the data by reviewing
cardholder statements, invoices, receipts, and other supporting documentation to validate
purchase amounts recorded in these systems. Based on our testing, we concluded that the
computer-processed data were sufficiently reliable for the purpose of our audit.

We reviewed reports prepared by OCFO staff of purchase card transactions that were overdue for
reconciliation. These reports were part of the “Fast Facts” reports distributed monthly to all
Department staff through the Department’s Intranet. We also reviewed detail reports of
unreconciled transactions that OCFO/FMO staff began providing to PO staff in February 2005.
We did not validate the accuracy of these reports, as we used them for informational purposes
only, as an indicator of reconciliation timeliness, and for trends in the numbers of unreconciled
items. See the OTHER MATTERS section of this report for more information on the reports
provided by FMO staff.

We conducted fieldwork at Department offices in Washington, DC, during the period August 5,
2004, through January 9, 2006. We held an exit conference with OCFO staff on January 26,
2006. Our audit was performed in accordance with generally accepted government auditing
standards appropriate to the scope of the review described above.
Final Report
ED-OIG/A19E0018                                                                      Page 10 of 15




                            ADMINISTRATIVE MATTERS



Corrective actions proposed (resolution phase) and implemented (closure phase) by your office
will be monitored and tracked through the Department’s Audit Accountability and Resolution
Tracking System. Department policy requires that you develop a final corrective action plan
(CAP) for our review in the automated system within 30 days of the issuance of this report. The
CAP should set forth the specific action items, and targeted completion dates, necessary to
implement final corrective actions on the finding and recommendations contained in this final
audit report.

In accordance with the Inspector General Act of 1978, as amended, the Office of Inspector
General is required to report to Congress twice a year on the audits that remain unresolved after
six months from the date of issuance.

Statements that managerial practices need improvements, as well as other conclusions and
recommendations in this report, represent the opinions of the Office of Inspector General.
Determinations of corrective action to be taken will be made by the appropriate Department of
Education officials.

In accordance with the Freedom of Information Act (5 U.S.C. § 522), reports issued by the
Office of Inspector General are available to members of the press and general public to the extent
information contained therein is not subject to exemptions in the Act.

We appreciate the cooperation provided to us during this review. Should you have any questions
concerning this report, please call Michele Weaver-Dugan at (202) 245-6941. Please refer to the
control number in all correspondence related to the report.


                                             Sincerely,




                                             Helen Lew /s/

                                             Assistant Inspector General for Audit Services 

Final Report
ED-OIG/A19E0018                                                                                   Page 11 of 15




                        ATTACHMENT 1

       PRIOR OIG REPORTS ON THE PURCHASE CARD PROGRAM



On October 13, 2000, the OIG issued a report entitled, Results of the OIG Review of Internal
Controls over the Use of Purchase Cards and Third-Party Drafts (Control Number A&I 2000­
015). OIG had issued 14 reports to individual principal offices, and in this summary report, cited
a number of deficiencies in internal control over the purchase card program, including that
cardholders did no t always maintain documentation to support purchases, approving officials did
not always document review of purchase card statements, procurement staff were not fully aware
of their responsibilities, Department guidelines needed to be updated, and training needed to be
improved. OIG made several recommendations to improve controls over the program, including
enhanced purchase card training and a requirement for refresher training, updates to the
Department Directive on purchase card use, establishment of a Department website to convey
requirements and information, reduction in spending limits, and improvements in the
reconciliation process.

On September 28, 2001, OIG issued a report entitled, Follow-Up Review of Internal Controls
Over Purchase Cards (Control Number A&I 2001-004). This review was performed to
determine if the Department had taken corrective actions on two recommendations relating to the
reconciliation process from the prior review. OIG concluded that although improvements were
being made, further actions were needed. OIG emphasized the importance of issuing the updated
Department Directive so that all purchase card participants understand the program requirements.

On November 20, 2001, OIG issued a report entitled, Review of Department-wide Purchase
Card Statement Late Notices for June 2001 (Control Number A&I 2001-05). This review was
performed to further evaluate late notices sent by OCFO to AOs for one month. OIG found that
recordkeeping at OCFO may have been inadequate to accurately track the timeliness of purchase
card statement submissions. OIG noted that new procedures implemented were intended to track
receipt of statements electronically. OIG suggested that the Deputy Chief Financial Officer
solicit and receive assurance from responsible OCFO officials that the new procedures are
working.

On April 9, 2002, OIG issued a report entitled, Audit of Purchase Cards at the U.S. Department
of Education (Control Number A17-C0002). This audit was performed to determine whether the
Department had addressed the internal control weaknesses and related issues presented in the
first purchase card review above. The audit reported that the Department had addressed the
internal control weaknesses previously reported, but that additional internal controls were
needed. OIG recommended the Department develop on-site 4 guidelines and conduct on-site
internal control reviews, and reassess the number of cardholders assigned to AOs.


4
 The term on-site was defined as a review at the locations where purchase card activity and approval was
performed.
Final Report
ED-OIG/A19E0018                                                               Page 12 of 15




                                 ATTACHMENT 2

                         PRINCIPAL OFFICE REPORTS ISSUED




                                                           Audit
                                                          Control
                      Principal Office                    Number        Report Date

Federal Student Aid (FSA)                                 A19F0016    October 20, 2005
Institute of Educational Sciences (IES)                   A19F0021   September 14, 2005
Office of the Chief Financial Officer (OCFO)              A19F0013   September 14, 2005
Office for Civil Rights (OCR)                             A19F0019   September 14, 2005
Office of Elementary and Secondary Education (OESE)       A19F0018   September 27, 2005
Office of English Language Acquisition, Language
Enhancement, and Academic Achievement for Limited
English Proficient Students (OELA)                        A19F0008      July 14, 2005
Office of General Counsel (OGC)                           A19F0006   September 27, 2005
Office of Innovation and Improvement (OII)                A19F0012     May 17, 2005 *
Office of Intergovernmental and Interagency Affairs
(OIIA)                                                    A19F0020    October 25, 2005
Office of Legislation and Congressional Affairs
(OLCA)                                                    A19F0011     May 26, 2005 *
Office of Management (OM)                                 A19F0014    October 25, 2005
Office of Postsecondary Education (OPE)                   A19F0017   September 14, 2005
Office of Safe and Drug-Free Schools (OSDFS)              A19F0010    August 11, 2005
Office of the Secretary/Office of the Deputy
Secretary/Office of the Under Secretary
(OS/ODS/OUS)                                              A19F0015   November 3, 2005
Office of Special Education and Rehabilitation Services
(OSERS)                                                   A19F0005     June 28, 2005
Office of Vocational and Adult Education (OVAE)           A19F0006      July 1, 2005


* Limited review, Closeout Letter issued.
Final Report
ED-OIG/A19E0018                                              Page 13 of 15




                       ATTACHMENT 3

          UNIVERSE OF TRANSACTIONS IN EACH OFFICE





                    Principal    Total       Value of
                     Office   Transactions Transactions
                      FSA            1,661      $814,542
                       IES             233       $72,363
                     OCFO              568      $285,333
                      OCR              247      $130,377
                     OESE              149       $85,989
                     OELA               58       $33,693
                      OGC              103       $58,758
                       OII              99       $40,203
                      OIIA             290      $148,008
                     OLCA               22         $6,371
                      OM               621      $277,581
                      OPE              438      $197,634
                     OSDFS              64       $37,202
                  OS/ODS/OUS         1,110      $450,882
                     OSERS             631      $137,950
                     OVAE              180       $65,762

                     Total           6,474      $2,842,648
Final Report
ED-OIG/A19E0018                                                  Page 14 of 15




                         ATTACHMENT 4

              TRANSACTIONS REVIEWED IN EACH OFFICE




                                                   Total       Value of
  Principal   Random Blocked    Over            Transactions Transactions
   Office     Sample  MCC      $2,500   Weekend  Reviewed     Reviewed
    FSA         70      3         0        0        73            $59,319
     IES         9      0         0        0         9             $8,913
   OCFO         38      3        0         0        41            $35,709
    OCR         10      1        0         0        11             $8,602
   OESE          8      0        4         0        12            $13,828
   OELA          4      0        0         0         4             $4,743
    OGC          6      0        0         0         6             $7,430
     OII         1      0        0         0         1               $536
    OIIA        20      3        0         0        23            $18,906
   OLCA          0      3        0         0         3             $1,000
                                                                  $22,683
    OM            29     3       0         0        32
    OPE           20     1       3         0        24            $30,313
  OSDFS            3     0       0         0         3             $4,815
OS/ODS/OUS        36    10       0         0        46            $41,310
  OSERS           19     0       2        41        62            $31,517
   OVAE           7     0        2         0         9            $11,199

    Total         280   27      11        41         359         $300,823
Final Report
ED-OIG/A19E0018                                                 Page 15 of 15




                    ATTACHMENT 5

        DOCUMENTATION ERROR RATES IN EACH OFFICE




                           Total     Transactions w/o
              Principal Transactions    Required        Error
               Office    Reviewed Documentation         Rate
                FSA         73             54            74%
                 IES         9              7            78%
               OCFO         41             24            59%
                OCR         11              6            55%
               OESE         12              8            67%
               OELA          4              4           100%
                OGC          6              5            83%
                 OII         1              0             0%
                OIIA        23             17            74%
               OLCA          3              3           100%
                OM          32             22            69%
                OPE         24             11            46%
               OSDFS         3              3           100%
            OS/ODS/OUS      46             34            74%
               OSERS        62             40            65%
               OVAE          9              1            11%

                  Total      359           239          67%
                                                                                                       Attachment 6
                       UNITED STATES DEPARTMENT OF EDUCATION
                                   OFFICE OF THE CHIEF FINANCIAL OFFICER

                                                                                       THE CHIEF FINANCIAL OFFICER


                                               MAR 2 4 2006


MEMORANDUM

TO:                Helen Lew
                   Assistant Inspector General fortudit
                                            Ii j ll./\{i '{.{
FROM:              William McCabe /s/~ ".
                   Acting Chief Financial Officer

SUBJECT:           Draft Audit Report
                   Department ofEducation Controls over Purchase Card Use
                   Control Number ED-OIG/A19E0018

I am pleased to have the opportunity to respond to the draft audit report entitled
"Department of Education Controls over Purchase Card Use." The Office of the Chief
Financial Officer (OCFO) has no comment on the objectives, scope, methodology or
findings in the report. We concur with the report's six recommendations. Attached is the
draft Corrective Action Plan (CAP) for implementing these recommendations.

If you have any questions regarding this response, please feel free to contact Glenn Perry
at 202-245-6200.

Attachment: Draft Corrective Action Plan (CAP)


cc: 	    Danny A. Harris, PhD.
         Deputy Chief Financial Officer

         Glenn Perry
         Director, Contracts and Acquisitions Management




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