goods and services were independently received and accepted. As shown in table 1, we estimated that the overall failure rate for the attributes we tested was 41 percent, with failure rates of 15 percent for authorization and 34 percent for receipt and acceptance.
Table 1: Statistical Testing Results—All Purchase Card Activity over $50
Control activities Appropriate authorization Independent receipt and acceptance Overall failure rate
Estimated percentage failure rate in key controls
Ninety-five percent confidence interval
15 34 41
8–23 25–44 31–51
Source: GAO testing and statistical analysis of executive agencies’ purchase card transactions and convenience checks provided by Bank of America, Citibank, JPMorgan Chase, Mellon Bank, and U.S. Bank.
Lack of proper authorization. As shown in table 1, 15 percent of all transactions failed proper authorization. According to Standards for Internal Control in the Federal Government, transactions and other significant events should be authorized and executed only by persons acting within the scope of their authority, as this is the principal means of assuring that only valid transactions to exchange, transfer, use, or commit resources and other events are initiated or entered into. To test authorization, we accepted as reasonable evidence various types of documentation,24 such as purchase requests or requisitions from a responsible official, e-mails, and other documents that identify an official government need, including blanket authorizations for routine purchases with subsequent review by an approving official.
The lack of proper authorization occurred because (1) the cardholder failed to maintain sufficient documentation, (2) the agency’s policy did not require authorization, or (3) the agency lacked the internal controls and management oversight to identify purchases that were not authorized— increasing the risk that agency cardholders will misuse the purchase card. Failure to require cardholders to obtain appropriate authorization and lack
24The General Records Schedule 3 states that contract records, including correspondence and related papers pertaining to award, administration, receipt, inspection, and payment for transactions that exceed the simplified acquisition threshold may be destroyed 6 years and 3 months after final payment; whereas, similar records for transactions at or below the simplified acquisition threshold may be destroyed 3 years after final payment.
GAO-08-333 Governmentwide Purchase Cards