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Results of Transaction- Based Internal Control Testing Exceeding Micropurchase Limit

requirements. These changes are positive steps in improving internal controls over the purchase card program.

While only 3 percent of governmentwide purchase card transactions from July 1, 2005, through June 30, 2006, were purchases above the micropurchase threshold of $2,500, these transactions accounted for 44 percent of the dollars spent during that period. Because of the large dollar amount associated with these transactions, and additional requirements related to authorization27 than are required for micropurchases, we drew a separate statistical sample to test controls over these larger purchases. Specifically, we tested (1) proper purchase authorization and (2) independent receipt and acceptance. As part of our test of proper purchase authorization, we looked for evidence that adequate competition was obtained. If competition was not obtained, we asked for supporting documentation showing that competition was not required, for example, that the purchase was acquired from sole-source vendors.

We estimated that 48 percent of the purchase card transactions over the micropurchase threshold failed our attribute tests. As shown in table 3, for 35 percent of purchases over the micropurchase threshold, cardholders failed to obtain proper authorization. Additionally, in 30 percent of the transactions, cardholders failed to provide sufficient evidence of independent receipt of the goods or services.

Table 3: Statistical Testing Results—Purchase Transactions over $2,500

Control activities Appropriate authorization Independent receipt and acceptance Overall failure rate

Estimated percentage failure rate in key controls

Ninety-five percent confidence interval

35 30 48

26–45 21–39 38–58

Source: GAO testing and statistical analysis of executive agency purchase card transactions and convenience checks provided by Bank of America, Citibank, JPMorgan Chase, Mellon Bank, and U.S. Bank.

Lack of proper authorization for purchases over the micropurchase limit. As table 3 indicates, 35 percent of purchases over the

27With certain exceptions, the FAR requires that cardholders obtain competition from separate sources prior to making purchases over the micropurchase threshold.

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GAO-08-333 Governmentwide Purchase Cards

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