As part of the General Services Administration’s (GSA) SmartPay program, there are more than 3.5 million charge card accounts for federal government employees. It is currently the largest credit card program in the world because it works with 350 federal agencies and other organizations and the cards are issued through the U.S. Bank, JP Morgan Chase and Citibank.
What’s perhaps may be the most damning part of the Treasury Inspector General audit report is that in the fiscal year 2012 it was discovered that $29.32 billion was charged in 95.6 million transactions. This is actually down from $30.8 billion and 100 million transactions from the year prior.
There has been no confirmation as to how much misuse there has been in the last three years, but a 2008 Government Accountability Office (GAO) report found that 41 percent of the transactions were not part of government purchasing rules and another 48 percent of transactions over $2,500 violated federal regulations.
At the time of the report, the Washington Post reported that federal government employees used these credit cards to purchase lingerie, Internet dating services, $13,000 dinners with steak and liquor, iPods and even gambling. Despite the GSA claiming purchase cards save about $1.7 billion each year, there has been a tremendous amount of fraud in the past that could offset the savings.
The GSA isn’t the only federal agency with purchase cards. The Treasury Inspector General explained in its audit that the Internal Revenue Service, which has been plagued with scandals as of late, does not institute correct monitoring practices when it comes to its employees’ usage of these cards during their travels.
In fiscal year 2011, the IRS travel card program doled out 52,000 individually billed travel card accounts. In total, there were $121 million in charges, which is considered to be quite a lot of travel and expenses.
“As the report indicates, the IRS’s travel card program controls are generally effective with delinquency rates below one percent,” the agency said in a statement to the media. “Though the vast majority of cardholders used their travel cards in an appropriate manner and paid their bills on time, the IRS appreciates TIGTA’s recommendations and we have already implemented a number of them, including monitoring daily ATM limits. We are working to improve our controls and appreciate TIGTA’s support as we implement the recommendations.”
The audit also found that IRS travel cardholders performed more than 50,000 ATM withdrawals of the maximum $110 per day and $1,100 during each billing cycle. There were 133 situations where there were cash advances of $110 each day and 92 cases of more than $1,100 per cycle.
Furthermore, it was revealed that the IRS spent a total of $49 million over a three-year period on 225 conferences. One aspect of the watchdog report listed a $4.1 million price tag on an Anaheim, California conference that consisted of video productions and giveaways to its employees – more than 2,600 employees attended the conference.
“Effective cost management is especially important given the current economic environment and focus on Government efficiency,” J. Russell George, the Treasury Inspector General for Tax Administration, said in a statement. “Certain of the IRS’s expenses associated with the Anaheim conference do not appear to be a good use of taxpayer funds.”
Two aspects of the report that have been highly criticized in the past was more than $50,000 to produce a Star Trek parody and a video featuring 15 IRS executives and managers dancing on a stage. The other was $133,350 for 15 outside speakers, including one speaker for $17,000, who painted six portraits of famous people.
It appears that the IRS is just stacking up scandal after scandal.