Historical Results of Transaction-Based Internal Control Testing
of management oversight increase the risk that fraudulent, improper, and other abusive activity will occur without detection.
Lack of independent receipt and acceptance. As depicted in table 1, our statistical sampling of executive agency purchase card transactions also found that 34 percent of transactions failed independent receipt and acceptance, that is, goods or services ordered and charged to a government purchase card account were not received by someone other than the cardholder. According to Standards for Internal Control in the Federal Government, the key duties and responsibilities need to be divided or segregated among different people to reduce the risk of error or fraud. Segregating duties entails separating the responsibilities for authorizing transactions, processing and recording them, reviewing the transactions, and handling related assets. The standards further state that no one individual should control all key aspects of a transaction or event.
As evidence of independent receipt and acceptance, we accepted any signature or initials of someone other than the cardholder on the sales invoice, packing slip, bill of lading, or any other shipping or receiving document. We found that lack of documented, independent receipt extended to all types of purchases, including pilferable items such as laptop computers. Independent receipt and acceptance helps provide assurance that purchased items are only acquired for legitimate government need and not for personal use.
Although we did not test the same number of attributes as in previous audits of specific agencies’ purchase card programs, for those attributes we tested, the estimated governmentwide failure rates shown in this report are lower than the failure rates we have previously reported for certain individual agencies. Table 2 provides failure rates from our prior work related to proper approval and independent receipt and acceptance for certain individual agencies.
GAO-08-333 Governmentwide Purchase Cards