oversight

Department of Health and Human Services: Controls over Travel Program Are Generally Effective, but Some Improvements Are Needed

Published by the Government Accountability Office on 2003-02-21.

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

                United States General Accounting Office

GAO             Report to the Chairman, Subcommittee
                on Oversight and Investigations,
                Committee on Energy and Commerce,
                House of Representatives

February 2003
                DEPARTMENT OF
                HEALTH AND
                HUMAN SERVICES
                Controls over Travel
                Program Are
                Generally Effective,
                but Some
                Improvements Are
                Needed




GAO-03-334
                a
                                               February 2003


                                               DEPARTMENT OF HEALTH AND HUMAN
                                               SERVICES

Highlights of GAO-03-334, a report to the      Controls over Travel Program Are
Chairman, Subcommittee on Oversight
and Investigations, Committee on Energy        Generally Effective, but Some
and Commerce, House of Representatives
                                               Improvements Are Needed

 By their nature, determining and              HHS’s process for monitoring its travel card program, which includes
 paying allowable travel costs pose            reviewing bank reports to identify delinquent cardholders, effectively
 substantial risk, making effective            minimized delinquencies and write-offs. However, some unauthorized use of
 internal control crucial. Because of          the travel card still occurred.
 this and weaknesses in internal
 control identified in the GAO review
 of travel card usage at the
                                               As shown below, HHS delinquency rates were lower than governmentwide
 Department of Defense, GAO was                rates for most of 2001 and declined further in 2002. Also, HHS’s .29 percent
 requested to review the Department            write-off rate—the amount of unpaid travel card charges written off as a
 of Health and Human Services’                 percentage of total travel charges—was slightly lower than the
 (HHS) travel program. GAO                     governmentwide rate of .44 percent.
 assessed whether HHS’s process for
 monitoring travel charge cards helps          HHS Delinquency Rates for Fiscal Years 2001 and 2002 Compared to Governmentwide Rates
 minimize delinquencies, write-offs,
 and unauthorized use. GAO also
 assessed whether controls over
 travel voucher processing help
 ensure proper reimbursements. GAO
 tested a statistical sample of travel
 card transactions at each of five
 HHS component agencies to
 determine if they were for
 authorized purposes. GAO also
 reviewed related travel vouchers to
 determine if reimbursement
 amounts were proper.

                                               HHS has not always identified or prevented unauthorized travel card use
                                               because its monitoring of travel card use focuses mainly on delinquencies.
 GAO recommends that HHS require               GAO estimated that unauthorized travel card transactions for fiscal year
 component agencies to                         2001 ranged from about 7 percent at one HHS component agency to about 22
 •   periodically test a sample of             percent at another. Examples of unauthorized charges included personal
     travel card transactions to               charges for meals and automated teller machine withdrawals. While
     identify unauthorized travel
                                               unauthorized use had minimal negative monetary effect because the majority
     card charges and
 •   reinforce the requirement that            of cardholders who made these charges paid their travel card bills timely,
     voucher processing                        left unchecked, such use could lead to increased delinquencies and write-
     staff/reviewers check vouchers            offs.
     for proper per diem amounts
     and amounts credited on hotel             GAO also found weaknesses in voucher processing, inadequate review of
     bills and obtain and retain the           vouchers, and poor record retention, resulting in some employees being
     necessary receipts.                       reimbursed for more than allowable expenses and for amounts not properly
 HHS concurred with our                        supported. The excess reimbursement ranged from about $2 on one voucher
 recommendations and stated that it            to about $250 on another. While these amounts alone are insignificant and
 is working to implement them.                 relate to only a small percentage of travel reimbursements for fiscal year
www.gao.gov/cgi-bin/getrpt?GAO-03-334.
                                               2001, excess reimbursements reduce the amount of available travel funds.
                                               Further, vouchers that are not supported by related receipts make it difficult
To view the full report, including the scope   to determine if the reimbursement amounts are proper.
and methodology, click on the link above.
For more information, contact Linda Calbom
at (202) 512-9508 or calboml@gao.gov.
Contents



Letter                                                                                                   1
                             Results in Brief                                                            2
                             Background                                                                  3
                             Scope and Methodology                                                       7
                             HHS Travel Card Monitoring Process Has Effectively Minimized
                               Delinquencies and Write-offs, but Some Unauthorized Use Still
                               Occurs                                                                    9
                             Controls over Travel Voucher Processing Could Be Improved                  18
                             Conclusions                                                                20
                             Recommendations for Executive Action                                       21
                             Agency Comments and Our Evaluation                                         21


Appendixes
              Appendix I:    Objectives, Scope, and Methodology                                         23
             Appendix II:    Comments from the Department of Health and Human
                             Services                                                                   27
             Appendix III:   GAO Contact and Staff Acknowledgments                                      30


Tables                       Table 1: Fiscal Year 2001 Travel Card Activity at HHS Component
                                      Agencies Selected for Review                                       7
                             Table 2: Write-offs of Travel Card Charges                                 11
                             Table 3: Estimate of Unauthorized Fiscal Year 2001 Travel Card
                                      Transactions                                                      15
                             Table 4: Number and Category of Unauthorized Travel Card
                                      Transactions                                                      15
                             Table 5: Estimate of Travel Vouchers Related to Fiscal Year 2001
                                      Travel Card Transactions That Were in Excess of Proper
                                      Travel Expenses or Were Not Properly Supported                    19
                             Table 6: Number of Travel Vouchers Related to Fiscal Year 2001
                                      Travel Card Transactions That Were in Excess of Proper
                                      Travel Expenses or Were Not Properly Supported                    19
                             Table 7: Fiscal Year 2001 Travel Card Activity at HHS Component
                                      Agencies Selected for Review                                      23
                             Table 8: Estimates of Fiscal Year 2001 Unauthorized Travel Card
                                      Transactions                                                      25
                             Table 9: Summary of Cardholders with Unauthorized Transactions
                                      Who Had Their Accounts Written Off during Fiscal Year
                                      2001                                                              25




                             Page i                             GAO-03-334 HHS Controls over Travel Program
         Contents




         Table 10: Estimates of Travel Vouchers Relating to Fiscal Year 2001
                   Travel Card Transactions That Were Not Properly
                   Supported or Were Overstated                                                     26


Figure   Figure 1: HHS Travel Card Delinquency Rates for Fiscal Years 2001
                   and 2002 Compared to Governmentwide Rates                                        10




         Abbreviations

         ATM                   automated teller machine
         CMS                   Centers for Medicare and Medicaid Services
         FDA                   Food and Drug Administration
         GSA                   General Services Administration
         HHS                   Department of Health and Human Services
         IHS                   Indian Health Service
         NIH                   National Institutes of Health
         OMB                   Office of Management and Budget
         OS                    Office of the Secretary




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         Page ii                                     GAO-03-334 HHS Controls over Travel Program
A
United States General Accounting Office
Washington, D.C. 20548



                                    February 21, 2003                                                                         Leter




                                    The Honorable James Greenwood
                                    Chairman
                                    Subcommittee on Oversight and Investigations
                                    Committee on Energy and Commerce
                                    House of Representatives

                                    Dear Mr. Chairman:

                                    The Department of Health and Human Services (HHS), like other federal
                                    agencies, issues travel cards to personnel for expenses related to official
                                    government travel. The travel card program is intended to improve
                                    convenience for the traveler and to reduce the government’s administrative
                                    costs. By their nature, determining and paying allowable travel costs pose
                                    substantial risk, making effective internal control crucial. Because of this
                                    and weaknesses identified in our reviews of travel card usage at the
                                    Department of Defense,1 you asked us to review HHS’s travel program.
                                    Specifically, you requested that we determine whether (1) HHS has an
                                    effective process for monitoring its travel card program to minimize
                                    delinquency rates, write-offs, and unauthorized use of the card and
                                    (2) HHS’s controls over travel voucher processing are effective in helping
                                    ensure that travelers are not receiving reimbursements in excess of proper
                                    travel expenses. This report provides the results of our review of travel
                                    card use at five HHS component agencies for fiscal year 2001.




                                    1
                                     U.S. General Accounting Office, Travel Cards: Control Weaknesses Leave Army
                                    Vulnerable to Potential Fraud and Abuse, GAO-02-863T (Washington, D.C.: July 17, 2002);
                                    Travel Cards: Control Weaknesses Leave Navy Vulnerable to Fraud and Abuse, GAO-03-
                                    148T (Washington, D.C.: Oct. 8, 2002); and Travel Cards: Control Weaknesses Leave Army
                                    Vulnerable to Potential Fraud and Abuse, GAO-03-169 (Washington, D.C.: Oct. 11, 2002).




                                    Page 1                                    GAO-03-334 HHS Controls over Travel Program
Results in Brief   HHS’s process for monitoring its travel card program has been effective in
                   minimizing delinquencies and write-offs. HHS’s travel card delinquency
                   rates were lower than the governmentwide rates in fiscal years 2001 and
                   2002. For example, in December 2001, the governmentwide rate was 12.6
                   percent, compared to HHS’s rate of 9.3 percent, and in August 2002, the
                   governmentwide rate was 6.6 percent, while HHS’s rate had declined
                   sharply to 1.9 percent. Similarly, HHS’s write-off rate—the amount of
                   unpaid travel card charges written off as a percentage of total travel card
                   charges—was slightly lower than the governmentwide rate. The HHS
                   travel card write-off rate was .29 percent as compared to the
                   governmentwide rate, which was .44 percent.2

                   We attribute HHS’s better-than-average performance to its monitoring
                   process, which includes reviews of monthly bank reports by program
                   coordinators to identify delinquent cardholders and actions such as
                   contacting the cardholders and their supervisors to inform the cardholders
                   that they need to pay their travel card bills. The low delinquency and write-
                   off rates can also be attributed to workforce demographics. HHS
                   employees whose jobs require travel tend to be higher paid and have many
                   years of work experience making them more likely to pay their bills on
                   time.

                   While HHS’s monitoring efforts help keep delinquencies and write-offs
                   lower than other federal agencies, the efforts have not always identified or
                   prevented unauthorized use of the card. We found instances of
                   unauthorized travel card use at each of the five component agencies we
                   reviewed. The percentage of unauthorized transactions ranged from 7
                   percent at one component to 22 percent at another.3 Examples of
                   unauthorized use included (1) personal charges for meals and automated
                   teller machine (ATM) withdrawals, (2) charges that were for business-
                   related purposes, but still unauthorized, such as parking for local meetings,
                   and (3) charges for which the component agencies did not provide us with
                   documentation supporting that the transactions were related to official
                   government travel. When employees are issued travel cards, they sign
                   agreements that they will use the travel cards only for authorized official


                   2
                    The amount of write-offs is for the period from the inception of the current travel card
                   contract in November 1998 through August 2002. The total amount of travel card charges is
                   for all of fiscal years 1999-2001 and fiscal year 2002 through August.
                   3
                   See app. I for confidence intervals associated with these estimates.




                   Page 2                                      GAO-03-334 HHS Controls over Travel Program
             government travel expenses. The cases of unauthorized use we identified
             had minimal negative effect because the majority of the cardholders who
             made these charges paid their travel card bills on time. At the same time,
             using the travel card for unauthorized purposes violates the Federal Travel
             Regulation, and, left unchecked, could lead to increased delinquencies and
             write-offs in the future.

             Our review also determined that weaknesses in HHS controls over travel
             voucher processing at five component agencies resulted in some
             employees being reimbursed for amounts that were not correct or not
             properly supported, mainly because of inadequate review of travel
             vouchers and poor record retention. The most common errors that we
             identified were reimbursement for (1) per diem in excess of authorized
             amounts and (2) items such as telephone calls and hotel taxes that the
             hotel charged to the traveler, and then credited to the traveler’s account.
             We found such errors in 20 of the 349 vouchers we reviewed. The amount
             of excess reimbursements we identified ranged from about $2 on one
             voucher to over $250 on another. While these amounts alone are
             insignificant, they relate to only a small percentage of travel
             reimbursements for fiscal year 2001, and if extrapolated to all travel
             reimbursements, the amounts could be significant. Excess amounts
             reimbursed reduce the amount of travel funds available during the year for
             other mission-related activities requiring travel. In addition, we could not
             determine the validity of reimbursements for 14 of the 349 vouchers
             because the component agencies did not maintain adequate supporting
             documentation. Therefore, neither they nor we can determine if the travel
             voucher reimbursements are proper.

             This report makes recommendations that, if fully implemented, will help
             HHS to reduce unauthorized and personal use of travel cards and help
             ensure that travelers are not receiving reimbursements in excess of proper
             travel expenses. HHS concurred with our recommendations and stated
             that it is working to implement them. HHS’s written comments and
             separate technical comments are evaluated in the “Agency Comments and
             Our Evaluation” section near the end of our report.



Background   HHS is the U.S. government’s principal agency for protecting the health of
             all Americans and providing essential human services. To help fulfill its
             mission, HHS requires many of its employees to travel throughout the
             country, and the world, to inspect food and drug manufacturers, administer
             Medicare and Medicaid programs, attend conferences, and perform other



             Page 3                               GAO-03-334 HHS Controls over Travel Program
               functions in furthering its mission. Federal regulations require most HHS
               employees who travel to use the government travel card—a type of charge
               card—for all official travel-related expenses. The federal government’s
               travel card program is significantly different from its purchase card
               program in that the cardholder is directly responsible for all charges
               incurred on his or her travel card account and the monthly bill is sent to the
               cardholder for payment. The cardholder is responsible for submitting a
               properly documented travel voucher and is reimbursed by HHS for all valid
               expenses related to official government travel. In contrast, all purchase
               card charges are billed directly to the government for payment.



Travel Cards   In 1983, the General Services Administration (GSA) awarded a
               governmentwide master contract with a private company to provide
               government-sponsored, contractor-issued travel cards to federal
               employees to be used to pay for costs incurred on official government
               travel. The intent of the travel card program was to improve convenience
               for the traveler and to reduce the government’s cost of administering travel
               by reducing the need for cash advances to the traveler and the
               administrative workload associated with processing and reconciling travel
               advances. Under the current GSA master contract, HHS entered into a task
               order with U.S. Bank to provide travel card services.

               The Travel and Transportation Reform Act of 1998 (P.L. 105-264) expanded
               the use of government travel cards by mandating the use of the cards for all
               official travel expenses unless specifically exempted. The act is intended
               to further reduce the overall cost of travel to the federal government
               through reduced administrative costs and by taking advantage of rebates
               from the travel card contractor based on the volume of transactions
               incurred using the card and on cardholders paying their monthly travel
               card bills on time. To help cardholders pay their monthly bills on time, the
               act also requires that agencies reimburse cardholders for proper travel
               claims within 30 days of submission of proper travel vouchers. Further, the
               act allows, but does not require, agencies to offset a cardholder’s pay for
               amounts the cardholder owes to the travel card contractor as a result of
               travel card delinquencies not disputed by the cardholder. As required by
               the act, GSA incorporated its requirements into the Federal Travel
               Regulation, which governs travel and transportation and relocation
               allowances for all federal government employees, including overall policies
               and procedures governing the use of government travel cards. Agencies
               are required to follow the requirements of GSA’s Federal Travel




               Page 4                                GAO-03-334 HHS Controls over Travel Program
Regulation, but can augment these with their own implementing
regulations.

In accordance with the act, HHS employees are required to use the travel
card for official travel expenses, including cash advances through ATM
machines. Travelers do not have to use their travel cards for laundry and
dry cleaning, parking, taxi, tips, meals when the use of the card is not
practical, and in cases where the vendor does not accept the card. The
travel card is not to be used for personal purchases or ATM withdrawals
unrelated to official travel. In fiscal year 2001, HHS had almost 40,000
individually billed travel card accounts and about $73.4 million in related
travel card charges.

Travel cardholders are responsible for paying their travel card bills upon
receipt of their monthly statements. The bank may suspend an account if
payment for any undisputed principal amount is not received within 60
calendar days from the closing date on the statement on which the unpaid
charge first appeared. Suspension means the cardholder will be unable to
use the travel card until the bank receives payment. The bank may cancel
an account if (1) the account has been suspended twice during a 12-month
period for nonpayment of undisputed principal amounts and is past due
again with payment not received within 45 calendar days from the closing
date on the billing statement in which the charge first appeared or (2) the
account is 126 days past due from the closing date on the billing statement
in which the unpaid charge first appeared. When the card is canceled due
to nonpayment, the bank may report the delinquency to credit bureaus and
refer the account to collection agencies. If an account becomes 180 days
past due, the bank can write off the account.

HHS component agencies receive quarterly rebates from U.S. Bank based
on the volume of transactions incurred using the card and on cardholders
paying their monthly travel card bills on time. The rebate amount is
reduced if significant numbers of cardholders do not pay their bills on time.




Page 5                               GAO-03-334 HHS Controls over Travel Program
                 Each of the component agencies has program coordinators4 who are
                 responsible for the travel card program in their offices. We were told that
                 individuals were given this responsibility as a collateral duty, in addition to
                 other travel-related or administrative duties.5 The program coordinators
                 monitor travel card usage, serve as focal points for answering questions,
                 submit travel card applications to the bank on behalf of the travelers, issue
                 travel cards, and retrieve the cards from employees when they leave HHS.
                 Program coordinators told us they monitor travel card usage by reviewing
                 monthly reports from U.S. Bank, mainly to identify delinquent cardholders.
                 Once the delinquent cardholders are identified, the program coordinators
                 told us that they contact the cardholders and their supervisors to take
                 action to get the bills paid.



Travel Process   Each of the five component agencies we reviewed has its own travel
                 process and system, although they all operate similarly. In most cases,
                 travel orders and travel vouchers are prepared and approved electronically.
                 When a cardholder is required to travel for official government purposes,
                 either administrative staff or the traveler prepares a travel order by
                 entering travel information in the component agency’s automated travel
                 system. The information entered includes duration and points of travel,
                 amounts of per diem and ATM advances authorized, and mode of travel.
                 The travel order is then automatically routed to the appropriate authorizing
                 official(s) for approval.

                 Within 5 working days of return, the traveler is required to submit a
                 voucher claiming allowable expenses incurred while on travel. The
                 traveler (or the agency’s administrative staff) prepares a travel voucher,
                 which includes an itemized list of travel expenses. The automated system
                 routes the travel voucher to one or more persons for approval. The final
                 approving official, depending on the component agency, may be the
                 traveler’s supervisor or a staff member in the travel/financial management
                 office. The approving official is to ensure proper receipts are attached, per
                 diem rates are correct, and expenses are properly claimed.



                 4
                  Program coordinators are also called travel card coordinators, agency/organization
                 program coordinators, and agency points of contact.
                 5
                  As we discuss later in this report, Centers for Medicare and Medicaid Services staff
                 members told us that they have recently designated a staff member to work full-time on
                 travel card monitoring.




                 Page 6                                      GAO-03-334 HHS Controls over Travel Program
              The voucher is then routed to the payment office for reimbursement to the
              traveler. Some vouchers are selected for audit either before or after
              payment is made, depending on the component agency. These audits are to
              consist of a complete, thorough review of the voucher, including verifying
              that (1) correct per diem rates were used, (2) applicable receipts are
              attached and the amounts claimed on the voucher are supported by the
              receipts, (3) all other expenses are properly claimed, and (4) calculations
              are correct. The vouchers selected for audit include (1) all vouchers for
              senior executive staff and political appointees, (2) all vouchers over $1,500
              or $2,500, depending on the component agency, (3) all relocation vouchers,
              and (4) a sample of the remaining vouchers. In accordance with the Travel
              and Transportation Reform Act of 1998 and implementing federal
              regulations, HHS has 30 days after the traveler submits a proper travel
              voucher to reimburse the traveler.



Scope and     We selected five HHS component agencies for review based on the amount
              of travel card activity and delinquency rates in fiscal year 2001. Table 1
Methodology   shows the amounts of travel card activity for these component agencies in
              fiscal year 2001. These five component agencies, which incurred
              approximately 370,000 transactions in the amount of $48.8 million, covered
              nearly 70 percent of HHS’s travel card activity in fiscal year 2001.



              Table 1: Fiscal Year 2001 Travel Card Activity at HHS Component Agencies Selected
              for Review

                                                                Number of travel    Dollar value of
              Component agency                                 card transactions     transactions
              Centers for Medicare and Medicaid Services                  68,248        $9.0 million
              (CMS)
              Food and Drug Administration (FDA)                          83,552        14.2 million
              Indian Health Service (IHS)                                 99,167         7.6 million
              National Institutes of Health (NIH)                         43,173         7.6 million
              Office of the Secretary (OS)                                75,700        10.4 million
              Source: U.S. Bank data provided by HHS.


              To determine whether HHS has an effective process for monitoring its
              travel card program to minimize delinquency rates, write-offs, and
              unauthorized use of the card, we obtained an understanding of the travel
              card program, both departmentwide and for the five individual component



              Page 7                                    GAO-03-334 HHS Controls over Travel Program
agencies. We interviewed HHS staff and officials and reviewed HHS’s
departmentwide and individual component agencies’ policies and
procedures to identify procedures for monitoring their travel card
programs. We also obtained data from GSA on delinquency rates and write-
offs and compared HHS to other federal agencies. We did not assess the
reliability of the GSA data.

To determine the extent of unauthorized use of travel cards during fiscal
year 2001, we tested a statistical sample of travel card transactions from
each of the five component agencies. To select the sample, we obtained
(1) a database of HHS travel card transactions for fiscal year 2001 from U.S.
Bank, the contractor that administers the HHS travel card program, and
(2) lists of fiscal year 2001 travel orders and vouchers from the five
component agencies. From the U.S. Bank data, we selected random
samples of travel card transactions for each of the five component
agencies. Using the list of travel orders and vouchers and information
about each travel card transaction (i.e., date of transaction, location of
merchant, etc.), we determined whether the selected transactions were for
expenses of official travel. We also used information provided by the
component agencies about individual transactions to determine whether
they were authorized. Using the U.S. Bank data, we determined whether
those cardholders who used their travel cards for unauthorized purposes
paid their bills timely.

To determine whether controls over travel voucher processing are effective
in helping ensure that travelers are not receiving reimbursements in excess
of proper travel expenses, we identified the travel voucher covering each of
the transactions in our statistical sample and tested whether the
reimbursement amount was proper. For each voucher in the sample, we
verified that correct per diem rates were used, verified that ATM cash
withdrawal fees were calculated correctly, determined if the necessary
receipts were attached and the correct amounts were claimed on the
voucher, and verified that the calculations on the voucher were accurate.

Appendix I provides further detail on our scope and methodology. We
conducted our work from May 2002 through November 2002 in accordance
with generally accepted government auditing standards. We requested
comments on a draft of this report from the Secretary of Health and Human
Services or his designee. We received written comments as well as
separate technical comments which we have considered and incorporated
into our report as appropriate. We have reprinted the written comments in
appendix II.



Page 8                               GAO-03-334 HHS Controls over Travel Program
HHS Travel Card          Two key indicators of how well agencies monitor their travel card
                         programs are delinquency rates6 and write-off rates.7 For the past 2 years,
Monitoring Process       HHS’s delinquency rates and write-off rates have been lower than the
Has Effectively          governmentwide rates. HHS’s lower delinquency and write-off rates
                         indicate that its monitoring process is effective, but also can be attributed
Minimized                to demographics of the workforce. Travel card program coordinators
Delinquencies and        monitor monthly bank reports to identify delinquent cardholders and
Write-offs, but Some     follow up with them to get their bills paid. However, because the
                         monitoring efforts focus primarily on delinquencies, some unauthorized
Unauthorized Use Still   use goes undetected. We found unauthorized transactions such as charges
Occurs                   for personal meals and charges for business-related purposes that should
                         not have been paid for with the travel card. In assessing the impact that
                         unauthorized use had on the travel card program, we determined that the
                         majority of the employees responsible for the unauthorized use paid their
                         bills timely, thus having minimal effect on the rebate amount. However,
                         when employees use their travel cards for unauthorized purposes, it
                         increases the risk that they could become delinquent and have their
                         accounts written off, thus reducing the agency’s future rebates.



Monitoring Process Is    Travel card program coordinators monitor monthly bank reports to identify
Generally Effective      delinquent cardholders. According to the program coordinators, when they
                         identify these cardholders, they take action, such as contacting the
                         cardholders and their supervisors to inform them that they need to pay
                         their travel card bills so that the delinquencies do not continue. These
                         procedures have been effective in minimizing HHS’s delinquency rates and
                         write-off amounts. At the end of fiscal year 2001, HHS’s delinquency rate
                         was lower than the governmentwide rate. Figure 1 shows HHS’s
                         delinquency rates for fiscal years 2001 and 2002 (through August)
                         compared to the governmentwide rates, excluding HHS, and to the rates of
                         other civilian agencies, excluding HHS.




                         6
                          An account is delinquent when it has a balance outstanding for 61 or more days. The
                         delinquency rate is the percentage of the travel card balances outstanding for 61 or more
                         days. Under the terms of the cardholder’s agreement with U.S. Bank, payment of the travel
                         card statement is due to U.S. Bank upon receipt.
                         7
                          The write-off rate is the total amount of unpaid travel card charges written off as a
                         percentage of total travel card charges.




                         Page 9                                        GAO-03-334 HHS Controls over Travel Program
Figure 1: HHS Travel Card Delinquency Rates for Fiscal Years 2001 and 2002
Compared to Governmentwide Rates

15 Percent




12




  9




  6




  3




  0
        FY 01                       FY 01              FY 02                FY 02
      1st quarter                3rd quarter         1st quarter         3rd quarter

                Governmentwide, excluding HHS
                Civilian agencies, excluding HHS
                HHS
Source: GSA data.




Page 10                                            GAO-03-334 HHS Controls over Travel Program
Paying travel card bills on time and, thus, maintaining low delinquency and
write-off rates is important to the travel card program because banks that
administer the program offer agencies incentives in the form of rebates.
The GSA master contract requires the banks to pay a quarterly rebate to
agencies and GSA related to card usage. The rebate to the agency is
reduced, or eliminated, if significant numbers of an agency’s cardholders
do not make timely payments. Because the vast majority of HHS
cardholders pay their bills on time, write-offs as a percentage of total travel
card charges were lower than the governmentwide write-offs. Table 2
shows a comparison, based on the best available data, of the amount and
percentage of write-offs since inception of the travel card contract on
November 30, 1998, through August 2002 to total charges over a similar
period for HHS, governmentwide excluding HHS, and other civilian
agencies excluding HHS.8



Table 2: Write-offs of Travel Card Charges

                                            Cumulative (fiscal years 1999 through 2002)
                                                                                    Write-offs as
                                               Travel card          Travel card     a percentage
Agency                                          write-offsa           chargesb        of charges
HHS                                              $885,534        $307,709,183              .288%
Governmentwide, excluding HHS                  79,732,485      18,066,158,852              .441%
Civilian agencies, excluding HHS               18,172,713        5,976,032,608             .304%
Source: GSA data.
a
Amount of write-offs since inception of the travel card program in November 1998.
b
Amount of travel card charges for fiscal years 1999 through 2002 (as of August).


The monitoring process that HHS has in place for its travel card program
has helped it achieve better-than-average travel card performance. HHS
designates program coordinators to monitor the travel card program in
each HHS component agency and take corrective or disciplinary action
when necessary. Each month, U.S. Bank sends reports to the department


8
 Governmentwide is defined as the 24 Chief Financial Officers Act agencies. However, the
amounts of travel card charges for the Agency for International Development and the Office
of Personnel Management were not available for fiscal year 1999, and Department of the
Interior data were not available for fiscal year 2000 and Interior’s fiscal year 2001 and 2002
amounts included amounts for some purchase card charges. We used cumulative write-off
amounts because they were the best available data.




Page 11                                          GAO-03-334 HHS Controls over Travel Program
and to the component agencies. These reports contain information on
delinquencies and details on each cardholder’s travel card usage. The
department’s Office of Financial Policy also sends a monthly report that it
prepares based on U.S. Bank data to each of the component agency
program coordinators, which summarizes data on delinquencies and write-
offs. The Office of Financial Policy includes messages with these reports
reminding each component agency about the need to monitor the travel
card program effectively. Program coordinators told us they routinely
review the U.S. Bank reports to identify delinquent cardholders, and during
this review, they may also identify unauthorized charges. One program
coordinator told us he specifically looks for potential unauthorized or
personal use by all cardholders by checking the location where
transactions occurred (to detect purchases in the local area where
employees work) and the name of merchants where transactions occurred.
However, others only focused on delinquent cardholders.

Program coordinators issue messages to all staff reminding them of their
responsibility to pay their travel card bills on time and that the card is to be
used only for authorized expenses related to official travel. In addition,
U.S. Bank staff, departmental staff, and component agency program
coordinators participate in monthly conference calls to discuss issues
related to travel card policy and identify areas where additional monitoring
may be needed.

As monitoring procedures have identified agency- or employee-specific
problems, component agencies have implemented corrective or
disciplinary actions to address the problems. For example, at the
beginning of fiscal year 2002, IHS limited ATM withdrawals to $60 per day
not to exceed $360 per week, from the prior limits of $300 per day not to
exceed $600 per week. It also lowered the credit limit for most of its
cardholders to $3,500 per month. The limits had been as high as $15,000.
In addition, the IHS program coordinator sends letters to cardholders, their
supervisors, and unit managers containing specific details of the problems
and actions that can or will be taken. These additional controls may have
contributed to the decrease in IHS’s delinquency rate from almost 11
percent at the end of fiscal year 2001 to 3.8 percent in August 2002.

CMS staff members told us of recent actions taken by CMS related to its
travel card program. CMS has designated a staff member to work full-time
on monitoring travel card use and delinquencies. They also told us that
CMS lowered the travel card monthly purchase limits to $7,500 from prior
limits that were as high as $25,000.



Page 12                                GAO-03-334 HHS Controls over Travel Program
HHS component agencies have also taken disciplinary action against
cardholders who become delinquent and in danger of having their accounts
canceled or written off and who use their travel cards for unauthorized
purposes. These actions range from verbally reprimanding employees to
canceling travel card accounts. Specific examples are discussed in the
next section.

In addition to monitoring travel cards and taking action when problems
arise, HHS staff members responsible for the travel card program told us
that low delinquency and write-off rates can also be attributed to the
demographics of its workforce. They told us that most HHS employees in
the component agencies we reviewed whose jobs require travel tend to be
mid- to higher-level workers who have many years of work experience and
higher rates of pay. An exception is IHS, which had the highest delinquency
rates of the five component divisions we reviewed.9 According to IHS
officials, its traveling workforce tends to be less experienced and lower
paid than employees in the other component agencies. We found similar
circumstances during our review of travel at the Army.10 We reported that
most of the cardholders responsible for the Army’s high delinquency and
write-off rates were young, low- and mid-level enlisted military personnel
with relatively low incomes and little experience in handling personal
finances.

HHS continues developing plans to implement more controls over its travel
card program. In June 2002, HHS established a remedial action plan for its
travel card program in response to the Office of Management and Budget’s
(OMB) request that all federal agencies develop remedial action plans to
ensure the integrity of their travel card programs. In its plan, HHS listed
some other controls it is implementing HHS-wide, including the following:

• Adjusting spending limits—HHS will work with U.S. Bank to review
  spending patterns of cardholders and to establish criteria for lowering
  authorized spending limits.




9
 According to U.S. Bank data provided by HHS, at the end of fiscal year 2001, IHS’s
delinquency rate was 11.6 percent while the rates for CMS, FDA, NIH, and OS ranged from
1.3 percent to 3.5 percent. Similarly, in August 2002, IHS’s delinquency rate was 3.8 percent
and the other four component agency rates ranged from 1.5 percent to 2.9 percent.
10
     GAO-03-169.




Page 13                                      GAO-03-334 HHS Controls over Travel Program
                              • Putting a message on billing statements—HHS will work with U.S. Bank
                                to use the billing statement message space to remind cardholders to file
                                timely vouchers and pay travel card bills on time.

                              • Canceling cards that are used infrequently—Departmental management
                                will ask component agencies to consider deactivation, or cancellation,
                                of infrequently used travel cards.

                              HHS has also established a goal for further reducing its delinquencies. In
                              its letter to OMB, HHS noted that although it recognizes that there will
                              always be some delinquencies, the department has established a goal of
                              reducing its delinquency rate to 1 percent or less by September 30, 2003.
                              We agree that the delinquency rate should be minimal because the program
                              is designed so that employees receive reimbursement for their travel
                              expenses, which they are to use to pay their travel card bills. Implementing
                              its planned actions and continuing its monitoring efforts will be key to HHS
                              achieving this goal.



Despite Monitoring Efforts,   Federal regulations, HHS policies, and the agreement a cardholder signs
Unauthorized Use Still        with U.S. Bank when obtaining a travel card all state that the travel card
                              may be used only for official travel-related expenses. For each of the five
Occurs
                              component agencies, we tested a random sample of 86 fiscal year 2001
                              travel card transactions (for a total of 430 transactions) to determine
                              whether the transactions were for authorized purposes related to official
                              government travel. At each of the five HHS components we reviewed, we
                              found transactions that we characterized as unauthorized, either because
                              we determined that they were for personal use or the component agencies
                              were unable to provide approved travel orders or other documentation to
                              demonstrate that the transactions were official travel expenses. Table 3
                              shows the estimate of unauthorized fiscal year 2001 travel card
                              transactions.11




                              11
                               For comparison, the estimate of the percentage of unauthorized use at four Army sites we
                              reviewed and reported on earlier this year ranged from 15 percent at one site to 45 percent
                              (at a 95 percent confidence level) at another site. At three Navy sites we reviewed and
                              reported on, the estimate of unauthorized use ranged from 7 percent to over 26 percent (at a
                              95 percent confidence level).




                              Page 14                                      GAO-03-334 HHS Controls over Travel Program
Table 3: Estimate of Unauthorized Fiscal Year 2001 Travel Card Transactions

                                        Estimates of the percentage of unauthorized travel
Component agency                                                        card transactionsa
CMS                                                                                      17
FDA                                                                                      17
IHS                                                                                      22
NIH                                                                                      19
OS                                                                                        7
Source: GAO analysis.
a
See app. I for confidence intervals associated with these estimates.


Unauthorized transactions we identified that were for personal use
included charges for lodging, meals, and ATM withdrawals unrelated to
official government travel. In some of these cases, cardholders indicated
that they inadvertently used the travel card, rather than their personal
credit card. For other transactions, the component agency provided
documentation, such as a local travel voucher, that indicated the
transaction was business related but was unauthorized. Table 4 shows the
number of the unauthorized transactions (out of the 86 tested at each
component agency) we identified in the following categories: (1) personal,
(2) business related but unauthorized, and (3) charges for which the
component agencies did not provide us with adequate documentation to
make such a determination.



Table 4: Number and Category of Unauthorized Travel Card Transactions

                                    Category of unauthorized use
Component                                           Business           Inadequate
agency                      Personal use              related             support    Totals
CMS                                        1                  2               12         15
FDA                                        1                  1               13         15
IHS                                       14                  0                5         19
NIH                                       10                  4                2         16
OS                                         3                  1                2          6
Total                                     29                  8               34         71
Source: GAO analysis.




Page 15                                          GAO-03-334 HHS Controls over Travel Program
IHS had the marginally highest rate of unauthorized use, 19 of the 86
sampled transactions. We estimate that 22 percent12 of IHS travel card
transactions for fiscal year 2001 were for unauthorized purposes. Most of
the IHS unauthorized use was for personal purchases, such as gas and ATM
charges, or purchases made while on local travel. In one of these cases,
IHS told us that the employee was terminated in October 2001 for misuse of
his travel card. In another case, IHS told us the card had been canceled,
and in a third case, the employee had received a verbal reprimand for the
personal transaction. In other cases, IHS told us the matter was referred to
the cardholder’s administrative officer to determine action.

At NIH, we found that 16 of the 86 sampled transactions we reviewed were
considered unauthorized use of the travel card. We estimate that 19
percent13 of the NIH travel card transactions for fiscal year 2001 were used
for unauthorized purposes. Ten of the 16 unauthorized transactions were
for personal charges, including a charge at The Sports Authority. Four of
the 16 were for business-related purposes, such as using the card for
parking and registration fees for local meetings. This may indicate that
some cardholders are not aware that these types of charges are
unauthorized.

At CMS and FDA, we estimate that 17 percent14 of travel card transactions
for fiscal year 2001 at each component were for unauthorized purposes.
These instances of unauthorized use mainly represent transactions for
which the component agencies did not provide documentation to support
that the transactions were authorized and for official travel or were
unauthorized.

At OS, we estimate that 7 percent15 of fiscal year 2001 travel card
transactions were unauthorized. We identified personal charges for gas



12
 We are 95 percent confident that the actual percentage lies between 14 percent and 32
percent.
13
 We are 95 percent confident that the actual percentage lies between 11 percent and 29
percent.
14
 We are 95 percent confident that the actual percentage lies between 10 percent and 27
percent.
15
 We are 95 percent confident that the actual percentage lies between 3 percent and 15
percent.




Page 16                                     GAO-03-334 HHS Controls over Travel Program
and ATM withdrawals and one business-related transaction for parking at a
meeting.

In some cases, the component agencies had already identified
unauthorized transactions that were in our sample and had taken action,
and in other cases, the component agencies were not aware of the
unauthorized use until we brought it to their attention. For example, one of
the transactions in our NIH sample was a personal purchase of gasoline.
NIH provided documentation showing that the cardholder had several prior
instances of personal use of the card and had been delinquent in paying his
travel card bill. NIH canceled his travel card in June 2002, and the
employee voluntarily resigned. For two other unauthorized transactions in
our sample, NIH told us that the purchases were not identified until we
started our review. NIH also told us that in June 2002, it sent a document
containing the policy on proper use of the travel card to all cardholders
who had to certify that they read and understood the rules.

In addition to our assessment of unauthorized use, we took steps to
determine the potential impact that these instances of unauthorized use
had on the travel card program. Specifically, we determined whether the
employees responsible for the unauthorized use were late in paying their
bills or had their accounts written off. This is key because unauthorized
use of the travel card by itself has no direct negative monetary affect on the
government unless the cardholders do not pay their bills on time.
Delinquencies and write-offs affect how the bank calculates the amount of
an agency’s rebate. We reviewed U.S. Bank data for fiscal year 2001 to
determine whether those cardholders in our sample whose transactions
were personal, unauthorized, or undocumented paid their bills on time. Of
the 71 unauthorized or undocumented transactions that we reviewed, 3
were made by cardholders who did not pay their bills timely and had their
accounts written off. These 3 write-offs totaled $13,446.

While the majority of the cardholders in our samples who used their travel
cards for unauthorized and personal purposes paid their bills timely, using
the card for these purposes is against government regulations. Because
HHS’s monitoring efforts focus on identifying delinquent accounts, they
may not identify the majority of personal and other unauthorized use.
Although HHS’s delinquency rates are comparatively low, left unchecked,
personal and other unauthorized use of travel cards has the potential to
increase delinquencies and write-offs in the future.




Page 17                               GAO-03-334 HHS Controls over Travel Program
Controls over Travel   To assess whether controls over travel voucher processing were effective
                       in helping to ensure that travelers were not receiving reimbursements for
Voucher Processing     unallowable expenses or in excess of proper travel expenses,16 we tested
Could Be Improved      349 travel vouchers17 related to the sample of travel card transactions we
                       discussed earlier. While we did not find any cardholders who were
                       reimbursed for outright unallowable expenses, we did find some errors
                       that were not caught during the voucher review process, resulting in
                       reimbursements that exceeded proper expenses. The two most common
                       types of errors we identified were reimbursement for (1) per diem in
                       excess of authorized amounts and (2) items such as telephone calls and
                       hotel taxes that the hotel charged to the traveler, and then credited to the
                       traveler’s account. We could not determine the validity of some
                       reimbursements because the component agencies did not provide us with
                       all the receipts supporting the reimbursement amounts. Without the
                       proper supporting documentation, neither we nor the travel voucher
                       reviewers can determine with certainty whether reimbursements of travel
                       expenses are proper and correct.

                       Table 5 shows the estimate of travel vouchers in which the reimbursement
                       amounts were in excess of proper travel expenses or were not properly
                       supported.




                       16
                            We found some underpayments but did not include them as errors.
                       17
                         The number of vouchers tested (349) is less than the number of transactions tested (430)
                       because (1) there are no travel vouchers for the unauthorized transactions, (2) some
                       authorized transactions, such as airfare, were charged, but then the trips were canceled so
                       no vouchers were prepared, and (3) we did not receive complete copies of some vouchers
                       from HHS, so we were not able to review them.




                       Page 18                                       GAO-03-334 HHS Controls over Travel Program
Table 5: Estimate of Travel Vouchers Related to Fiscal Year 2001 Travel Card
Transactions That Were in Excess of Proper Travel Expenses or Were Not Properly
Supported

                                       Estimates of the percentage of travel vouchers that
Component agency                         were overstated or were not properly supporteda
CMS                                                                                      10
FDA                                                                                      13
IHS                                                                                       9
NIH                                                                                      10
OS                                                                                        6
Source: GAO analysis.
a
See app. I for confidence intervals associated with these estimates.


Table 6 gives a breakdown of the number of vouchers that we reviewed in
which the reimbursement amounts were in excess of proper travel
expenses or were not properly supported.



Table 6: Number of Travel Vouchers Related to Fiscal Year 2001 Travel Card
Transactions That Were in Excess of Proper Travel Expenses or Were Not Properly
Supported

                            Reimbursement exceeds                      Not properly
Component agency                  proper expenses                       supported     Totals
CMS                                                      3                       4        7
FDA                                                      2                       7        9
IHS                                                      6                       0        6
NIH                                                      6                       1        7
OS                                                       3                       2        5
Total                                                   20                      14       34
Source: GAO analysis.


As table 6 shows, the main reason for problems at FDA was poor record
retention. FDA did not provide sufficient documentation (mainly required
receipts for expenses like lodging and airfare) to determine whether the
reimbursements were proper. The most common type of problem that we
identified in testing vouchers for IHS and NIH was that per diem was
reimbursed for 1 day more than the number of days of actual travel or in
excess of authorized amounts. At IHS, three vouchers we tested included
reimbursement amounts totaling $95 related to excess per diem, and five


Page 19                                          GAO-03-334 HHS Controls over Travel Program
              NIH vouchers we tested included reimbursement amounts totaling $378
              related to excess per diem. This situation should have been identified in
              the process, either by employees when they signed the vouchers before
              submitting them for review, or by the reviewers before the vouchers were
              paid.

              The problems we found in testing vouchers for CMS and OS were lack of
              receipts and excess reimbursement for items such as telephone calls and
              hotel taxes that the hotel charged to the traveler, and then credited to the
              traveler’s account. The amount of excess reimbursement by CMS for items
              credited to hotel bills was about $33 and the amount for OS was about
              $159. We also found that CMS improperly reimbursed about $12 to a
              traveler for fees claimed on the voucher twice, and OS paid about $12 in
              excess per diem. While these amounts are minimal, they relate to only a
              small percentage of travel voucher reimbursements for fiscal year 2001,
              and if extrapolated to all travel reimbursements, the amount could be
              significant. Reimbursing employees for amounts that exceed proper
              expenses potentially reduces the amount of travel funds available during
              the year for other important mission-related activities requiring travel.
              Further, in cases where the component agencies did not maintain adequate
              documentation to support the amounts reimbursed on travel vouchers,
              neither they nor we can determine if the travel voucher reimbursements
              are proper.



Conclusions   HHS’s process for monitoring its travel card program has been effective in
              reducing delinquencies and write-offs. However, because the focus is
              primarily on identifying and addressing existing delinquencies as opposed
              to preventing or detecting unauthorized use, unauthorized use is not
              always identified. Unchecked, unauthorized use could lead to increased
              delinquencies and write-offs, thus reducing the rebates HHS earns on its
              travel card program. In addition, while component agencies have controls
              over travel voucher processing, these controls were not always effective in
              ensuring that per diem amounts claimed were proper and that
              reimbursements did not include amounts for which travelers had received
              credits on their hotel bills. Also, weaknesses in controls related to record
              retention impede reviewers’ ability to ensure that travel voucher
              reimbursement amounts are proper and accurate.




              Page 20                              GAO-03-334 HHS Controls over Travel Program
Recommendations for   To reduce unauthorized and personal use of travel cards and help ensure
                      that travelers are not receiving reimbursements in excess of proper travel
Executive Action      expenses, we recommend that the Secretary of Health and Human Services
                      require component agencies to

                      • include procedures in their monitoring efforts for periodically testing a
                        sample of travel card transactions to identify unauthorized travel card
                        charges and any adverse trends that would warrant further testing or
                        additional controls,

                      • issue an alert to voucher processing staff/reviewers reminding them to
                        check vouchers for proper per diem amounts and amounts credited on
                        hotel bills, and

                      • issue an alert to voucher processing staff/reviewers reminding them to
                        obtain and retain the necessary receipts needed to determine the
                        correct amount of travel reimbursement.



Agency Comments and   In written comments on a draft of this report, which are reprinted in
                      appendix II, HHS concurred with our recommendations and stated that it is
Our Evaluation        working to implement them. According to HHS, some of the component
                      agencies we reviewed are taking, or have taken, various actions to
                      implement our recommendations. These actions should help to reduce
                      unauthorized and personal use of travel cards and help ensure that
                      travelers are not receiving reimbursement in excess of proper travel
                      expenses. We urge HHS to ensure that the recommendations are addressed
                      departmentwide.

                      In separate technical comments, CMS took issue with three transactions
                      that we determined to be unauthorized because the agency did not provide
                      supporting documentation. As stated in our report, we characterized
                      certain transactions as unauthorized because we determined that they
                      either were for personal use or the component agencies did not provide us
                      an approved travel order or other documentation to demonstrate that the
                      transaction was an official travel expense.

                      These three transactions did not have cardholder names associated with
                      them in U.S. Bank’s database. CMS stated that it could not provide
                      documentation to support the transactions without a traveler name, and
                      therefore, these transactions should not be considered errors. We disagree.



                      Page 21                              GAO-03-334 HHS Controls over Travel Program
We had several conversations with representatives from U.S. Bank about
the data. Based on other data elements in its database, U.S. Bank
representatives told us that they had determined the transactions were
made with travel cards issued to CMS employees. CMS and the bank were
both aware of the account numbers associated with these three
transactions and other transaction information such as the merchant name
and address and transaction date. This information would have provided
them an avenue to ascertain the cardholder names.


As agreed with your office, unless you publicly announce its contents
earlier, we plan no further distribution of this report until 7 days after its
date. At that time, we will send copies to interested congressional
committees, the Secretary of Health and Human Services, and the Director
of the Office of Management and Budget. Copies will also be made
available to others upon request. In addition, this report will be available at
no charge on GAO’s Web site at http://www.gao.gov.

Please contact me at (202) 512-9508 or by E-mail at calboml@gao.gov if you
or your staff has any questions concerning this report. An additional GAO
contact and staff acknowledgments are provided in appendix III.

Sincerely yours,




Linda M. Calbom
Director, Financial Management
  and Assurance




Page 22                               GAO-03-334 HHS Controls over Travel Program
Appendix I

Objectives, Scope, and Methodology                                                                 AA
                                                                                                    ppp
                                                                                                      ep
                                                                                                       ned
                                                                                                         n
                                                                                                         x
                                                                                                         id
                                                                                                          e
                                                                                                          x
                                                                                                          Iis




              The objectives of our review were to determine whether (1) the
              Department of Health and Human Services (HHS) has an effective process
              for monitoring its travel card program to minimize delinquency rates, write-
              offs, and unauthorized use of the card and (2) HHS’s controls over travel
              voucher processing are effective in helping ensure that travelers are not
              receiving reimbursements in excess of proper travel expenses. We selected
              five HHS component agencies to review based on the amount of travel card
              activity and delinquency rates in fiscal year 2001. Table 7 shows the
              amounts of travel card activity for these component agencies in fiscal year
              2001. These five component agencies, which incurred approximately
              370,000 transactions in the amount of $48.8 million, covered nearly 70
              percent of HHS’s travel card activity in fiscal year 2001.



              Table 7: Fiscal Year 2001 Travel Card Activity at HHS Component Agencies Selected
              for Review

                                                                Number of travel    Dollar value of
              Component agency                                 card transactions     transactions
              Centers for Medicare and Medicaid Services
              (CMS)                                                       68,248        $9.0 million
              Food and Drug Administration (FDA)                          83,552        14.2 million
              Indian Health Service (IHS)                                 99,167         7.6 million
              National Institutes of Health (NIH)                         43,173         7.6 million
              Office of the Secretary (OS)                                75,700        10.4 million
              Source: U.S. Bank data provided by HHS.


              To determine whether HHS has an effective process for monitoring its
              travel card program to minimize delinquency rates, write-offs, and
              unauthorized use of the card, we obtained an understanding of the travel
              card program, both departmentwide and for the five individual component
              agencies. We interviewed HHS staff members and officials and reviewed
              HHS’s departmentwide and individual component agencies’ policies and
              procedures to identify procedures for monitoring their travel card
              programs. We also obtained data from the General Services Administration
              on delinquency rates and write-offs and compared HHS to other federal
              agencies.

              To determine the extent of unauthorized use of travel cards during fiscal
              year 2001, we tested random samples of travel card transactions from each
              of the five component agencies. To select the samples, we obtained (1) a
              database of HHS travel card transactions for fiscal year 2001 from U.S.



              Page 23                                   GAO-03-334 HHS Controls over Travel Program
Appendix I
Objectives, Scope, and Methodology




Bank, the contractor that administers the HHS travel card program, and
(2) lists of fiscal year 2001 travel orders and vouchers from the five
component agencies. We verified that the population of transactions in the
database agreed with control totals for the number and amount of
transactions provided by U.S. Bank. We were not able to verify the
completeness of the lists of travel orders and vouchers.

From the U.S. Bank data, we selected random samples of 86 travel card
transactions for each of the five component agencies, for a total of 430
transactions. Then, based on the date of the transactions and the dates of
travel, we identified the travel order related to each transaction. We asked
the component agencies to provide the travel order, travel voucher, and all
documentation and receipts supporting the amount claimed on the travel
voucher for each of the sampled transactions. Because we were not able to
ensure that the lists of travel orders were complete, in cases where we
could not identify a related order, we provided the component agencies
with information on the transactions, including cardholders’ names and
account numbers, merchant names and addresses, and dates of
transaction, so that they could try to identify the related orders through
other means. In some cases, the component agencies were able to locate
the related travel orders and vouchers, and they provided the documents to
us, or they provided us with documentation stating that the transactions
were not for authorized expenses related to official travel. In other cases,
the component agencies provided us with travel orders and vouchers, but
we determined that they did not relate to the transactions, or the
component agencies did not provide any documentation for some
transactions. We concluded that a transaction was an authorized use of the
travel card if there was an approved travel order related to the transaction.
We concluded the transaction was unauthorized if (1) the component
agency acknowledged unauthorized use, (2) the travel order we were
provided did not relate to the transaction, or (3) we were not provided with
any documentation. Table 8 shows the results of our tests, including the
point estimates and the two-sided, 95 percent confidence intervals for
fiscal year 2001 travel card transactions that were unauthorized.




Page 24                              GAO-03-334 HHS Controls over Travel Program
Appendix I
Objectives, Scope, and Methodology




Table 8: Estimates of Fiscal Year 2001 Unauthorized Travel Card Transactions

                                                                  Estimate of
                                             Number of         percentage of Confidence interval
                                          unauthorized         unauthorized      at a 95 percent
Component agency                           transactions         transactions   confidence level
CMS                                            15 of 86                 17%          10% to 27%
FDA                                            15 of 86                 17%          10% to 27%
IHS                                            19 of 86                 22%          14% to 32%
NIH                                            16 of 86                 19%          11% to 29%
OS                                              6 of 86                  7%           3% to 15%
Source: GAO analysis.


To determine the potential impact that the unauthorized transactions had
on the travel card program,1 we reviewed the U.S. Bank data and
determined whether those cardholders who used their travel cards for
unauthorized purposes paid their bills on time. Table 9 shows the number
of cardholders with unauthorized transactions who were delinquent and
who had their accounts written off during fiscal year 2001.



Table 9: Summary of Cardholders with Unauthorized Transactions Who Had Their
Accounts Written Off during Fiscal Year 2001

                            Number of           Number of Number of delinquent
                         unauthorized          cardholders  cardholders whose               Total
Component                 transactions           who were       accounts were          balances
agency                   (cardholders)          delinquent          written off       written off
CMS                                       15              5                      0
FDA                                       15              4                      0
IHS                                       19              12                     2     $6,600.42
NIH                                       16              6                      1      6,845.23
OS                                        6               1                      0
Total                                     71              28                     3    $13,445.65
Source: GAO analysis of U.S. Bank data.




1
 If cardholders do not pay their bills timely, the agency’s rebate amount can be reduced or
eliminated.




Page 25                                               GAO-03-334 HHS Controls over Travel Program
Appendix I
Objectives, Scope, and Methodology




To determine whether controls over travel voucher processing are effective
in helping ensure that travelers are not receiving reimbursements in excess
of proper travel expenses, we tested the travel voucher covering each of
the authorized transactions in our samples to determine whether the
reimbursement amount was properly supported and not overstated. For
each voucher in the sample, we verified that correct per diem rates were
used; verified that automated teller machine cash withdrawal fees were
calculated correctly, ensured that the necessary receipts were attached and
the correct amounts were claimed on the voucher, and verified that the
calculations on the voucher were accurate. Table 10 shows the results of
our tests, including the point estimates and the two-sided, 95 percent
confidence intervals for fiscal year 2001 travel vouchers relating to
authorized travel card transactions.



Table 10: Estimates of Travel Vouchers Relating to Fiscal Year 2001 Travel Card
Transactions That Were Not Properly Supported or Were Overstated

                                                   Estimate of
                                 Number of      percentage of
                             vouchers not travel vouchers not Confidence interval
                        properly supported properly supported     at a 95 percent
Component agency             or overstated       or overstated  confidence level
CMS                                  7 of 67                10%            4% to 20%
FDA                                  9 of 70                13%            6% to 23%
IHS                                  6 of 67                 9%            3% to 19%
NIH                                  7 of 67                10%            4% to 20%
OS                                   5 of 78                 6%            2% to 14%
Source: GAO analysis.


We conducted our work from May 2002 through November 2002 in
accordance with generally accepted government auditing standards. We
requested comments on a draft of this report from the Secretary of Health
and Human Services or his designee. Written comments were received
from HHS and are reprinted in appendix II. These written comments and
separate technical comments we received are evaluated in the “Agency
Comments and Our Evaluation” section near the end of our report.




Page 26                                    GAO-03-334 HHS Controls over Travel Program
Appendix II

Comments from the Department of Health and
Human Services                                                        Appendx
                                                                            Ii




              Page 27       GAO-03-334 HHS Controls over Travel Program
Appendix II
Comments from the Department of Health
and Human Services




Page 28                                  GAO-03-334 HHS Controls over Travel Program
Appendix II
Comments from the Department of Health
and Human Services




Page 29                                  GAO-03-334 HHS Controls over Travel Program
Appendix III

GAO Contact and Staff Acknowledgments                                                          Appendx
                                                                                                     iI




GAO Contact       Kimberly Brooks, (202) 512-9038



Acknowledgments   In addition to the contact named above, Sharon Byrd, Don Campbell,
                  Johnny Clark, Lisa Crye, Harold Fulk, Darren Goode, Kelly Lehr, Diane
                  Morris, Chanetta Reed, Taya Tasse, and Cynthia Teddleton made key
                  contributions to this report.




(190056)          Page 30                            GAO-03-334 HHS Controls over Travel Program
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