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Office of the Inspector General: 
United States Government Accountability Office: 
GAO/OIG: 

GAO Travel Cards: 

Opportunities Exist to Further Strengthen Controls: 

GAO/OIG-11-1: 

GAO/OIG Highlights: 

December 7, 2010: 

GAO Travel Cards: 

Opportunities Exist to Further Strengthen Controls: 

Objective: To assess whether GAO's policies and procedures (controls) 
are effective in preventing and detecting travel charge card misuse 
and delinquencies. 

What OIG found: GAO's policy and procedures were generally effective 
in preventing and detecting travel charge card misuse. For example, 
GAO monitors monthly travel card activity reports to identify 
potential misuse and contacts employees regarding questionable 
charges. However, based on our analysis of travel card data, we 
identified areas where GAO's travel card program could be strengthened 
by adopting selected best practices identified in related Office of 
Management and Budget (OMB) guidance. For example, we determined that 
GAO could lower the spending limits (maximum charge amounts) for many 
cards and reduce the number of cards in use. After we provided GAO 
officials with our analysis, the agency lowered the monthly spending 
limit for individual travel charge cards from $12,500 to $7,500 and 
plans to assess the need for further reductions. In addition, our 
analysis identified a number of cards that were not being used. In 
response, GAO in August 2010 eliminated 12 of its 18 centrally billed 
cards. 

In testing the effectiveness of GAO's monitoring of travel card 
delinquency, we found that the agency could improve its procedures to 
reduce delinquency. Our analysis of travel card payment information 
for 17 months showed that 238 employees, or 10 percent of card users, 
were delinquent one or more times. After we briefed GAO officials on 
our analysis, the agency changed its procedures to begin monitoring 
late travel card payments earlier and, to assess its monitoring 
efforts, has agreed to use a delinquency rate performance metric. 
While the agency has had a process to take action when employees were 
delinquent in paying their travel cards, we found that GAO was missing 
a key component—procedures that set out the requirements and time 
frames for referring delinquent cardholders for potential disciplinary 
action. 

We also determined whether GAO was using OMB Circular No. A-123, 
Appendix B guidance and the controls it requires executive branch 
agencies to use in managing their travel card programs. We found that 
GAO has implemented some of the controls identified by OMB in its 
guidance, but is not using other controls, such as statistical and 
narrative information on travel card use to enhance program oversight 
and management of its travel card program. Further, GAO had not 
developed a management plan to help provide a road map for ensuring 
the ongoing effectiveness of its risk management controls. In 
addition, we found that OMB's travel card guidance was not used by GAO 
to manage or assess the effectiveness of its travel card program 
controls. 

Recommendations for executive action: 

* Develop procedures to minimize the number of travel cards and review 
the appropriateness of travel card spending and related ATM cash 
advance limits. 

* Develop policies and procedures, including time frames, for 
referring delinquent cardholders for disciplinary action and notifying 
the OIG of actions taken. 

* Develop and report statistical and narrative travel card compliance 
information to oversight managers. 

* Establish a goal to gauge agency progress in reducing delinquency. 

* Review OMB Circular No. A-123, Appendix B, to identify and adopt, as 
appropriate, additional controls and best practices to help reduce 
travel card program risk and improve management's assessment of travel 
card program controls. 

[End of section] 

GAO/0IG: 

Memorandum: 

Date: December 7, 2010: 

To: Acting Comptroller General Gene L. Dodaro: 

From: [Signed by] Inspector General Frances Garcia: 

Subject: GAO Travel Cards: Opportunities Exist to Further Strengthen 
Controls: 

GAO had 2,884 travel card accounts, primarily issued to employees as 
individually billed accounts, and about $10.4 million in related 
travel card charges as of September 30, 2010. While the charges for 
centrally billed travel cards go directly to the government for 
payment,[Footnote 1] individually billed travel cardholders are 
directly responsible for all charges incurred on their travel card 
account and for remitting payments on the monthly bill. The 
cardholders are expected to use the government travel card only for 
valid expenses related to official travel. The intent of the travel 
card program is to improve convenience for the traveler and to reduce 
the government's costs of administering travel. Audits of agency 
travel card programs by GAO and others have found varying degrees of 
waste, fraud, and abuse at a number of agencies because the agencies 
have failed to implement adequate safeguards against card misuse. In 
response to these findings, Congress has held hearings and introduced 
legislation in the current Congress that would enhance travel card 
management and oversight.[Footnote 2] In addition, the Office of 
Management and Budget (OMB) has issued guidance, OMB Circular No. A-
123, Appendix B, for executive branch agencies that establish standard 
minimum requirements (including internal controls that are designed to 
minimize the risk of travel card misuse) and suggested best practices 
for government card programs.[Footnote 3] As a legislative branch 
agency, GAO is not required to follow any OMB circulars, including OMB 
Circular No. A-123 or its appendixes. However, as a matter of policy, 
GAO has indicated that it generally would assess and report on the 
effectiveness of GAO's internal controls in accordance with the 
principles of OMB Circular No. A-123.[Footnote 4] 

Background: 

GAO exists to support Congress in meeting its constitutional 
responsibilities and to help improve the performance and ensure the 
accountability of the federal government for the benefit of the 
American people. To help fulfill its mission, GAO requires many of its 
over 3,200 employees to travel to audit federal expenditure of funds. 
Federal travel regulations and GAO's travel card order require GAO 
employees who travel to use the government travel card—a type of 
charge card—for major official travel-related expenses. 

Government Travel Charge Cards: 

The Travel and Transportation Reform Act (TTRA) 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 accurate 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. 
For purposes of this report delinquency occurs when a travel charge 
card account has an unpaid balance that is outstanding 61 or more days 
after the billing or closing date on the travel card statement (not 
the date on which payment is due).[Footnote 5] 

As required by the act, the General Services Administration (GSA) 
incorporated its requirements into the Federal Travel Regulation 
(FFR), which governs travel policies for all federal government 
employees, including overall policies and procedures governing the use 
of government travel cards. The FTR requires all federal agencies to 
follow its requirements and allows agencies the flexibility to augment 
these requirements with their own implementing regulations. For 
example, while the FFR requires all federal employees to use travel 
cards for official business travel unless they travel five or fewer 
times a year, GAO's policy is that employees must use travel cards if 
they travel two or more times a year.[Footnote 6] In accordance with 
the act, GAO employees must use the travel card for official travel 
expenses, such as transportation tickets, lodging, and rental cars. 
The travel card is not to be used for personal purchases, such as 
books, newspapers, or cash advances through automatic teller machines 
(ATM) unrelated to official travel. 

GAO's travel card order requires employees to pay in full the amount 
on the travel card bill within 30 days of the billing statement date 
and does not allow extended or partial payments. The order also states 
that delinquent cardholders' travel card privileges are automatically 
suspended by U.S. Bank if the cardholder's outstanding balance has not 
been paid within 60 days of the billing date. Suspension means the 
cardholder will be unable to use the travel card until the bank 
receives payment. Under U.S. Bank's cardholder agreement, the amount 
on the travel card billing statement is due upon receipt and must be 
paid in full by cardholders each billing period. 

GAO uses a GSA contract to obtain government-sponsored travel cards 
services. GAO travel card services were provided by Bank of America 
from November 30, 1998, through November 29, 2008, and by U.S. Bank 
starting on November 30, 2008. GAO receives quarterly rebates from 
U.S. Bank based on the volume of card-based transactions and prompt 
cardholder payments. Rebates are based on the timeliness of payments 
and are reduced if significant numbers of cardholders do not pay their 
bills on time. 

GAO has a program coordinator who monitors travel card usage, serves 
as a focal point for answering questions, submits travel card 
applications to the bank on behalf of GAO travelers, issues travel 
cards, and retrieves the cards from employees when they leave the 
agency. GAO's program coordinator (located in GAO's Office of 
Financial Management) was given this responsibility as a collateral 
duty, in addition to other travel-related and administrative duties. 
Another key unit is the agency's Office of Workforce Relations, which 
is responsible for determining whether employees who misuse their 
travel card should be subject to disciplinary actions. 

Internal Control: 

Internal control, which comprises the plans, methods, and procedures 
used to meet missions, goals, and objectives, is a major part of 
managing an organization. Internal control does not guarantee the 
elimination of waste, fraud, and mismanagement; rather, it is a means 
of managing the risk associated with federal programs and operations. 
It also serves as the first line of defense in safeguarding assets and 
preventing and detecting errors and fraud. The three objectives of 
internal control are to ensure the effectiveness and efficiency of 
operations, reliability of financial reporting, and compliance with 
applicable laws and regulations. Managers should define the control 
environment (e.g., travel card program or financial reporting) and 
then perform risk assessments to identify the most significant areas 
within that environment for placing or enhancing internal controls. 
The risk assessment is a critical step in the process to determine the 
extent of controls. Once significant areas have been identified, 
control activities should be implemented. Continuous monitoring and 
testing should help identify poorly designed or ineffective controls 
and should be reported on periodically. Management is then responsible 
for redesigning or improving those controls. 

GAO's Standards for Internal Control in the Federal Government 
provides the overall framework for establishing and maintaining 
internal controls and for identifying and addressing areas at greatest 
risk of fraud, waste, abuse, and mismanagement.[Footnote 7] GAO issued 
these standards pursuant to requirements of the Federal Managers' 
Financial Integrity Act of 1982 (FMFIA). The act specifies that 
agencies must annually state whether their internal control systems 
comply with standards for internal control prescribed by the 
Comptroller General and provide reasonable assurance that, among other 
things, funds, property, and other assets are safeguarded against 
waste, loss, unauthorized use, or misappropriation. OMB Circular No. A-
123, Management Accountability and Control, is based on GAO's 
standards for internal control, and provides executive branch agencies 
specific requirements for assessing and reporting on controls. OMB 
Circular No. A-123 covers all aspects of an executive branch agency's 
operations and has three appendices that govern internal controls over 
financial reporting (Appendix A),[Footnote 8] government charge cards 
(Appendix B),[Footnote 9] and improper payments (Appendix C).[Footnote 
10] 

GAO's order on internal controls11 states the Comptroller General is 
committed to the spirit and intent of FMFIA and OMB Circulars. While 
the internal control order does not specifically refer to Appendix B, 
it does state that "management's responsibility for internal control 
is defined in OMB Circular No. A-123.[Footnote 11] GAO's Controller 
through the Office of Program Analysis and Operations annually 
conducts assessments of GAO's internal controls in accordance with the 
principles of OMB Circular No. A-123. We noted that GAO's order on 
travel cards[Footnote 12] does not refer to Appendix B and the agency 
travel card program officials told us that they do not follow the 
appendix in managing the program; and it is also not used in assessing 
the effectiveness of the program's internal controls. 

According to OMB's Circular No. A-123, Appendix B guidance, risk 
management controls, policies, and practices are a critical tool for 
ensuring the efficiency and integrity of charge card programs by 
eliminating payment delinquencies, charge card misuse, fraud, and 
other forms of waste and abuse. OMB's guidance requires executive 
branch agencies to have a charge card management plan that describes 
how the agencies will ensure the ongoing effectiveness of charge card 
program risk management controls. The general responsibilities of 
charge card managers in implementing these risk management controls, 
policies, and practices are as follows: 

* Implementing the appropriate controls to ensure compliance with 
federal laws and applicable regulations and for monitoring program 
effectiveness. 

* Ensuring that any risk management policies and practices established 
in the agency's charge card management plan are carried out 
effectively and that the charge card management plan is updated with 
enhanced risk management policies and practices, as applicable. 

* Ensuring that cardholder statements of account and supporting 
documentation are reviewed and utilized to monitor delinquency, 
misuse, and other transaction activities. 

* Reviewing available data to detect instances of delinquency, fraud, 
and misuse and identify trends and outliers in relevant indicators of 
charge card program performance. 

* Maintaining a policy that ensures that administrative and 
disciplinary actions are initiated in the event cardholders or other 
program participants fail to meet their responsibilities with respect 
to appropriate use and timely payment of charge cards. 

OMB's guidance also identifies controls and best practices that 
executive branch travel card managers should use. One control is split 
pay disbursement, which allows cardholders to route part of their 
travel voucher reimbursement, such as hotel, airfare, and rental car 
costs, directly to the bank (e.g., U.S. Bank). Cardholders would only 
be responsible for those expenses selected not to be paid directly to 
vendors by the bank, such as meals. Best practices include 
deactivating travel cards or lowering spending limits during periods 
of inactivity. OMB also requires executive branch agencies to have 
travel card delinquency performance metrics, which assess every 4 
months individually and centrally billed travel card balances that are 
unpaid for 61 or more days past the closing date on the travel card 
statement. 

Objective, Scope, and Methodology: 

To assess whether GAO's policies and procedures are effective in 
preventing and detecting travel charge card misuse and delinquencies, 
we interviewed GAO officials in charge of the travel card program and 
U.S. Bank officials who provide travel card services to GAO, to 
understand their responsibilities, to determine how the program is 
managed, and to identify applicable policies and procedures. We also 
reviewed GAO travel card program policy and procedures to understand 
how they help prevent and detect travel charge card misuse and 
delinquencies. Our criterion for reviewing GAO's policies and 
procedures was OMB Circular No. A-123, Appendix B, which establishes 
minimum requirements and suggested best practices for travel card 
programs within the executive branch. To test the effectiveness of 
these controls, we obtained U.S. Bank transaction data for GAO 
employees with individually billed travel cards and for GAO centrally 
billed travel cards from December 2008 (the first month these cards 
were available for use) through April 2010 and performed a number of 
analyzes to assess the effectiveness of GAO controls intended to 
reduce misuse and delinquency. We also assessed the reliability of 
U.S. bank data and found it to be sufficiently reliable to support the 
findings of our review. (See attachment I for details on our scope and 
methodology.) 

We conducted this performance audit from December 2009 through 
December 2010 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objective. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objective. 

Recommended Controls and Best Practices Could Help Reduce Potential 
Misuse and Delinquencies: 

Our review found that GAO could further reduce the risk of travel card 
misuse and delinquency by making greater use of recommended controls 
and best practices of OMB's Circular No. A-123, Appendix B. We tested 
agency controls over the travel card program by analyzing U.S. Bank 
transaction data on individually and centrally billed accounts and 
determined that (1) the number of travel cards could be reduced, (2) 
travel card spending limits could be lowered, and (3) increased 
monitoring of delinquent accounts was needed. We also identified that 
having additional procedures on certain aspects of the program, such 
as procedures that set out the requirements and time frames for 
referring delinquent cardholders for possible disciplinary actions, 
would strengthen GAO's program. In response to our work, GAO 
management has taken a number of actions to reduce the risk of 
delinquency, such as lowering the monthly spending limit for most 
individually billed cards from $12,500 to $7,500. 

In addition, we reviewed GAO's policy and procedures for detecting 
misuse and found them to be generally effective. For example, we 
determined that the GAO travel card program coordinator monitors 
travel card misuse by reviewing U.S. Bank reports every month. 
Specifically, to identify charges that may not be official travel 
expenses, the coordinator each month reviews a standard report that 
lists questionable transactions to help identify charges (e.g., 
alcohol, flowers, and gifts) that may be a misuse of the travel card. 
To identify ATM cash advances that may not involve government travel, 
the coordinator reviews data from the reports and confirms that a 
travel authorization or voucher exists for the time frame during which 
the ATM advance was received. When questionable charges or advances 
are identified, the coordinator sends an e-mail to the cardholder, as 
well as the cardholder's supervisors and management, and requests the 
cardholder review the questionable charges. After reviewing the 
charges, the cardholder is required to e-mail GAO's Office of 
Workforce Relations staff on whether the charges were travel-related 
or personal and to provide a brief explanation of the charge. Further, 
the procedures for detecting misuse also include instructions for 
referring employees to Workforce Relations for possible disciplinary 
actions. 

Analyses Support Reducing the Number of Issued Cards, Lowering of 
Spending Limits, and Increasing Monitoring of Delinquent Payments: 

Reduce the number of travel cards. Allowing individually billed 
cardholders to maintain travel card accounts when not needed for 
government travel unnecessarily increases the risk of misuse—through 
cardholders either mistakenly or intentionally using the card for 
personal purposes.[Footnote 13] To mitigate the risk of travel card 
misuse or delinquency, OMB's guidance identifies as a best practice 
performing periodic reviews of the number of travel cards in use to 
ensure their numbers are appropriate. 

To assess the controls over the issuance of GAO travel cards to 
prevent misuse, we analyzed U.S. Bank data that showed total monthly 
charges for the 3,071 GAO employees with individually billed cards and 
for the 18 centrally billed cards that were available during the 16-
month period we reviewed (December 2008 through March 2010). Our 
analysis showed that GAO could reduce risk of misuse by decreasing the 
number of both individually and centrally billed travel charge cards. 
For example, of 3,071 individually billed travel cards we analyzed, 
776 (25 percent) had never been used, and 376 (12 percent) were used 
once (had charges in one monthly billing statement). Of GAO's 18 
centrally billed travel cards, 12 were never used during the 16-month 
period we reviewed. These cards could have allowed thousands of 
dollars to be charged monthly. 

While GAO's policy requires employees to obtain and use government 
cards if they travel two or more times a year, we learned that GAO's 
practice was not consistent with its policy, and employees generally 
obtained cards with little or no assessment of their immediate or 
future travel needs. For instance, when GAO transferred its travel 
card program from Bank of America to U.S. Bank at the end of November 
2008, the agency had 2,815 new individually billed cards issued to GAO 
employees without assessing travel needs. In addition, the program 
coordinator stated that the agency did not continue the practice of 
annually reviewing travel card use. According to the coordinator, 
previously under Bank of America, GAO travel card program staff each 
March assessed whether employees had traveled in the prior year and, 
after checking with the employee to confirm they would not be 
traveling in the current year, would deactivate the cards of those 
employees who were determined to be infrequent travelers. The 
coordinator stated that, if a travel need arose, Bank of America cards 
could be quickly reactivated. U.S. Bank's policy is not to deactivate 
cards but to cancel them. Replacing canceled cards with new cards 
takes several days longer than reinstating deactivated cards. While 
U.S. Bank's policy does not allow for the deactivation of cards, the 
program coordinator stated he is now working with U.S. Bank to develop 
a process to identify cards with infrequent or no use and to lower the 
spending limit of these cardholders to $1, which could be readily 
increased, instead of the bank canceling the account. In addition, for 
the 16-month period we reviewed, our analysis shows that GAO issued 51 
travel cards to summer interns with a $6,000 monthly spending limit. 
Of the cards issued, 18 were used--16 had charges under $2,000, and 2 
had charges under $3,000. 

U.S. Bank has a process to identify and close travel cards that have 
not been used in 18 months. In its initial 18-month assessment 
(December 2008 through April 2010) of GAO travel cards, the bank 
identified 658 unused cards. GAO requested that 191 of those cards be 
kept open, resulting in 467 cards being closed. Since then, U.S. Bank 
identifies cards not used each month on a "rolling 18-month basis." In 
its fiscal year 2010 review of the agency's travel program internal 
controls, the Office of Program Analysis and Operations recommended re-
establishing a monitoring process for deactivating the travel cards 
for infrequent GAO travelers based on a shorter period than the 
current 18-month time period followed by U.S. Bank. However, as 
previously stated, U.S. Bank does not deactivate cards. As a result, 
GAO would need to further assess whether deactivation is possible and, 
if not, what other options are available. 

Lower travel card spending and ATM limits. To mitigate the risk of 
travel card misuse or delinquency, another OMB best practice is 
performing periodic reviews of the travel card spending limits and ATM 
cash transaction limits to ensure their appropriateness. Lowering 
limits can help reduce program risk because, with employees having 
smaller amounts available to use, there is less potential for misuse 
or delinquency. 

To test the appropriateness of spending limits, we analyzed U.S. Bank 
data for 2,295 GAO employees who used their individually billed cards 
from December 2008 through March 2010 and determined that GAO could 
reduce the risk of misuse by significantly lowering spending limits 
for many of these cards because most employees spent considerably less 
that allowed by the limits. For the period reviewed, most GAO 
employees had a $12,500 monthly limit on their travel cards and could 
have spent up to $25,000 in any 2 consecutive months.[Footnote 14] As 
shown in figure 1, we found that no employee's spending reached the 
$12,500 limit in the 16 months covered by our review. On average, 
employees spent a monthly total of $1,181 for the 16 months reviewed. 
Our analysis shows that the percentage of employees who would be 
affected by lowering the spending limit varied. For example, with a 
monthly limit of $4,000, 8.3 percent of 2,295 employees (or 191) would 
have exceeded this limit in the 16-month period, while 91.7 percent 
would not. Further, with a monthly limit of $6,000, 2.4 percent of 
employees (or 55) would have exceeded this limit for the period 
reviewed. (See attachment II for more information on our analysis of 
travel card spending limits.) 

Figure 1: Individually Billed Cardholders Exceeding 1-Month 
Alternative and Actual Spending Limits, December 2008 through March 
2010: 

[Refer to PDF for image: combination vertical bar and line graph] 

Spending limit: $2,000; 
Percentage of employees over the limit: 35.2%; 
Number of employees over the limit: 807. 

Spending limit: $4,000; 
Percentage of employees over the limit: 8.3%; 
Number of employees over the limit: 191. 

Spending limit: $6,000; 
Percentage of employees over the limit: 2.4%; 
Number of employees over the limit: 55. 

Spending limit: $8,000; 
Percentage of employees over the limit: 0.7%; 
Number of employees over the limit: 16. 

Spending limit: $10,000; 
Percentage of employees over the limit: 0.3%; 
Number of employees over the limit: 6. 

Spending limit: $12,500; 
Percentage of employees over the limit: 0; 
Number of employees over the limit: 0. 

Source: OIG analysis of U.S. Bank data. 

Note: Alternative limits range from $2,000 to $10,000. The actual 
limit was $12,500. 

[End of figure] 

Similarly, as shown in figure 2, we learned no employee's spending 
reached the $25,000 2-monthly spending limit in the 16 months covered 
by our review. On average, employees spent a total of $1,604 during 
any 2 consecutive months for the 16 months reviewed.
We also identified how employees would be affected by various lower 
spending limits. For example, half of active card users never spent 
more that $2,000 in a 2-month period. Further, with a 2-month limit of 
$4,000, 17 percent of employees (or 390) would have exceeded this 
limit in the 16-month period, while 83 percent would not. And, with a 
2-month limit of $6,000, 7.4 percent of employees (or 170) would have 
exceeded this limit for the period reviewed. 

Figure 2: Individually Billed Cardholders Exceeding 2-Month 
Alternative and Actual Spending Limits, December 2008 through March 
2010: 

[Refer to PDF for image: combination vertical bar and line graph] 

Spending limit: $2,000; 
Percentage of employees over the limit: 49.1%; 
Number of employees over the limit: 1,127. 

Spending limit: $4,000; 
Percentage of employees over the limit: 17%; 
Number of employees over the limit: 390. 

Spending limit: $6,000; 
Percentage of employees over the limit: 7.4%; 
Number of employees over the limit: 170. 

Spending limit: $8,000; 
Percentage of employees over the limit: 2.6%; 
Number of employees over the limit: 59. 

Spending limit: $10,000; 
Percentage of employees over the limit: 0.8%; 
Number of employees over the limit: 19. 

Spending limit: $15,000; 
Percentage of employees over the limit: 0.2%; 
Number of employees over the limit: 4. 

Spending limit: $20,000; 
Percentage of employees over the limit: 0; 
Number of employees over the limit: 0. 

Spending limit: $25,000; 
Percentage of employees over the limit: 0; 
Number of employees over the limit: 0. 

Source: OIG analysis of U.S. Bank data. 

Note: Alternative limits range from $2,000 to $20,000. The actual 
limit was $25,000. 

[End of figure] 

Our analysis also shows that GAO needs to review its limits on ATM 
cash advances to reduce the risk of misuse. GAO travelers can obtain 
up to $1,500 in cash each week and a daily maximum of $500. Cash 
advances must be limited to expenses that cannot be charged to 
employees' government travel card, such as incidental expenses (e.g., 
taxis and other local transportation). Our analysis shows that since 
91.7 percent of employees charged less than $4,000 per month for the 
16-month period, having a $1,500 weekly cash advance limit would seem 
much higher that warranted for most employees. 

With U.S. Bank, GAO has had 18 centrally billed travel cards with 
monthly spending limits ranging from $50,000 to $250,000. We analyzed 
data on these cards' use from December 2008 through March 2010 and 
determined that GAO could reduce the risk and liability of these cards 
by lowering their limits. Our analysis showed for the six centrally 
billed cards used during this period, two had monthly charges above 
$10,000. Specifically, one with a $200,000 monthly spending limit had 
about $21,000 in monthly charges and the other with a $20,000 monthly 
spending limit had about $12,000 in monthly charges for the 16-month 
period reviewed. The other four cards with monthly spending limits 
ranging from $50,000 to $200,000 had monthly charges below $2,000 for 
the period reviewed. Having high monthly spending limits for GAO 
centrally billed cards that had limited or no use for the period 
reviewed possess an inherent risk to the agency since GAO is directly 
responsible for paying all charges related to these cards. 

Having procedures for periodically reviewing travel card spending 
limits and related ATM limits would enhance GAO's travel card program 
controls and would also be consistent with GAO's Standards for 
Internal Control in the Federal Government, which requires that 
management develop and document procedures.[Footnote 15] For example, 
the Managing Director of GAO's Forensic Audits and Special 
Investigations unit stated that having periodic reviews (e.g., once or 
twice per year) would provide the agency with data by which to 
evaluate limits and help reduce the inherent risk of the program. 
Further, the Library of Congress has a similar requirement that 
employee travel card use be reviewed twice a year and cards 
deactivated that have not been used for 6 months. 

Increase monitoring of travel card delinquency. As previously 
discussed, a travel card account with an unpaid balance that is 
outstanding 61 or more days after the billing or closing date on the 
travel card statement is considered delinquent. Government travel 
cards have an inherent risk for delinquency because no interest for 
late payments is charged to the cardholder. 

To test the effectiveness of GAO's monitoring of delinquency, we 
analyzed U.S. Bank payment data for GAO employees who used their 
individually billed cards one or more times from December 2008 through 
April 2010 (hereafter referred to as active cards) and found that GAO 
could strengthen its controls to reduce the risk of delinquency. Our 
analysis showed that 238 employees, or over 10 percent, of 2,306 
active card users during this 17-month period were delinquent one or 
more times. Of the 238 employees, 

* 214 were delinquent 1 to 30 days (the number of times employees were 
delinquent in making their payments ranged from one to eight), 

* 22 were delinquent 31 to 60 days (the number of delinquencies per 
employee ranged from one to four), and, 

* 2 were delinquent 61 days or more (one employee was delinquent two 
times and one was delinquent three). 

Three key factors appear to have contributed to the large number of 
delinquencies identified through our analysis. First, GAO was not 
using an OMB-prescribed performance metric that provides a quick and 
effective means of assessing delinquency of individually billed 
accounts and identifies areas where increased management attention is 
needed. It is also considered a key indicator of how well agencies 
monitor their travel charge card program. The delinquency rate 
performance metric is calculated each month by U.S. Bank and 
represents agency travel card account balances outstanding for over 61 
days. It is reported using three levels of performances—fully 
successful (accounts less than 2 percent delinquent), minimally 
successful (greater than 2 percent to less than 4 percent), or 
unsuccessful (4 percent or more). In addition, the agency does not 
have a delinquency rate performance goal, which GAO has reported can 
help gauge agency progress in reducing delinquency.[Footnote 16] 
Having such a goal would provide GAO with an additional mechanism by 
which to determine whether its travel card controls were effective in 
reducing employee travel card delinquency. 

Second, prior to August 2010, GAO's monitoring process resulted in 
notifications to employees with accounts that were 10 days or more 
days delinquent—that is, 71 days or more past the closing date on the 
billing statement—which would not enable the agency to prevent 
delinquencies before they occurred. Under this process, the program 
coordinator each month would review a U.S. Bank report that listed all 
late and delinquent accounts in order to identify accounts that were 
10 and 30 days delinquent. The coordinator then notified each of the 
delinquent cardholders and their management that the payment was past 
due and must be paid immediately.[Footnote 17] 

Third, at the time of our review there were no policies and procedures 
that set out the requirements for when or how to refer delinquent 
cardholders for possible disciplinary actions and for identifying the 
appropriate offices to be notified, such as GAO's Office of Workforce 
Relations and its Office of Inspector General. During the time period 
we reviewed, U.S. Bank notified the GAO program coordinator that two 
employees were 91 days or more past due (or 61 days or more 
delinquent) and that GAO could initiate the salary offset process to 
satisfy their debts. After U.S. Bank brought the two employees to the 
coordinator's attention, the coordinator notified the employees, their 
supervisors, and managers of the potential salary offset and card 
cancellation,[Footnote 18] and urged prompt resolution. The 
coordinator also referred the two cases to Workforce Relations for 
consideration of disciplinary action. The travel card account for one 
of these employees was canceled, and the employee was subject to 
disciplinary actions. 

With no policies or procedures to make referrals, the program 
coordinator did not notify GAO's Office of Workforce Relations and its 
Office of Inspector General (OIG) about the 22 employees who were 
delinquent 31 to 60 days or the 214 who were delinquent 1 to 30 days. 
Absent notification, the Office of Workforce Relations cannot 
determine if possible disciplinary actions are warranted. Moreover, if 
OIG is not routinely notified of delinquencies (and of other 
significant employee abuses of their travel cards), it may not (1) 
become aware of systemic weaknesses in the travel card program that 
could be corrected through improved internal controls or other 
improvements to oversight of the program that OIG might recommend, and 
(2) be able to meet its responsibility to keep the Comptroller General 
and Congress fully informed concerning fraud and other serious 
problems, abuses, and deficiencies relating to the administration of 
programs and operations of GA0.[Footnote 19] In addition, without such 
information, OIG would not be able to determine whether employees 
might have violated any federal criminal law that could warrant a 
referral to the U.S. Attorney General, an important statutory 
responsibility of OIG. 

Recent Management Attention: 

After we briefed GAO managers on the interim results of our work in 
June 2010, the agency has taken a number of actions. In August 2010, 
GAO changed its monitoring process to focus on accounts that are 10 
days past due rather than 10 days delinquent, has agreed to adopt the 
use of the delinquency performance metric, eliminated 12 of its 18 
centrally billed cards, and reduced the monthly spending limit for one 
centrally billed travel card from $200,000 to $125,000. In September 
2010, the agency lowered the monthly spending limit for most 
individually billed cards from $12,500 to $7,500, the 2-month limit 
from $25,000 to $15,000, and the GAO intern limit from $6,000 to 
$4,000. The GAO Controller stated the agency plans to later assess the 
need for further reductions in travel card spending limits. Lastly, 
the agency issued three agencywide notices that emphasize the 
importance of employees being timely in making travel card payments. 

Applying Additional Controls and Best Practices Could Further Reduce 
the Risk of Travel Card Misuse and Delinquency: 

In reviewing the effectiveness of GAO's efforts to prevent and detect 
travel card misuse and delinquency, we also examined whether GAO was 
following best practices and other recommended controls that OMB 
Circular No. A-123, Appendix B guidance requires for executive branch 
agencies to reduce the risk of misuse and delinquency. GAO is using 
some of the controls and best practices cited in OMB's guidance. For 
example, GAO has blocked the use of individually billed cards at a 
large variety of merchants that would result in improper charges. 

Our review identified that GAO could use other controls and best 
practices provided in OMB Circular No. A-123, Appendix B, such as 
using split pay disbursement of cardholders travel reimbursement to 
better mitigate the risk of card misuse or delinquency. Using more of 
these controls and best practices could help GAO further reduce the 
risk of misuse or delinquency in its travel card program and also 
support the agency in achieving its strategic goal of being a leading 
practices federal agency. GAO may want to consider adopting the 
following controls and best practices. 

Split pay disbursements. Split pay disbursements allow cardholders to 
route key parts of their travel reimbursement (such as airfare, rental 
car, and hotel costs) directly to U.S. Bank and thus provide a quicker 
and more convenient way for cardholders to pay the bank for certain 
travel charges. Further, with cardholders responsible for directly 
paying a smaller amount of expenses, the use of split pay disbursement 
reduces the amount available to be delinquent and increases agency 
rebates that are tied to the timeliness of payments. Split pay 
disbursement can also reduce the risk of travel card misuse because 
with most of an employee's travel costs being directly paid to a bank, 
employees have fewer travel costs (e.g., ATM cash advances) that could 
be misused. The Managing Director of GAO's Forensic Audits and Special 
Investigations unit, who has conducted several reviews of federal 
government travel cards programs, stated that split pay disbursement 
is a widely accepted practice for reducing delinquency and could 
assist GAO in reducing its delinquency rate. According to GAO 
officials, GAO will begin assessing the feasibility of using split pay 
disbursements at GAO after the Department of Transportation's (DOT) 
Enterprise Service Center implements split pay at DOT's internal 
agencies, which is scheduled to be completed in fiscal year 2011. 
[Footnote 20] GAO officials stated that in fiscal year 2011, DOT also 
plans to begin working with its other federal customers—including GAO. 
Once it becomes available to GAO, the agency will decide whether it 
will adopt split pay disbursement. 

Periodically reporting information to management. OMB's guidance calls 
for executive branch agencies to use charge card data to monitor 
compliance with agency policies and to assess the effectiveness of 
efforts to mitigate risk of fraud, waste, and abuse. Executive branch 
agencies are required to maintain statistical and narrative 
information related to their travel card programs and to periodically 
report it to OMB.[Footnote 21] The statistical data required by OMB 
guidance include the number of cards, by spending and transaction 
limit; active accounts; charge card dollars spent; total rebates 
earned; cases reported to the Office of Inspector General; and 
administrative and disciplinary actions taken. The narrative 
information includes descriptions of the current process for 
monitoring delinquency, best practices the agency uses in charge card 
management, and plans (within the next 12 months) to enhance charge 
card systems by automating reviews to detect instances of abuse, 
misuse, or fraud. 

During the time of our review, GAO was not maintaining this type of 
information or reporting it to management. Given the results of our 
work, it is important that GAO begin maintaining and reporting this 
information to management so that the agency can better oversee its 
efforts to reduce the risk of misuse and delinquency. In addition, 
having such information could improve the management of this program 
and increase rebates. For example, this information could provide 
trend data on whether rebates to GAO were increasing as a result of 
recent agency efforts to ensure more prompt payment of travel card 
bills and fewer delinquencies. 

Performance metrics. Under OMB guidance, performance metrics are 
considered to be a critical tool for improving charge card management, 
and there are several metrics to assess the effectiveness of 
management controls, policies, and practices and to identify areas 
where increased management attention is needed. Two key metrics are 
the travel card delinquency rate for individually billed accounts and 
travel card delinquency rate for centrally billed accounts. Both 
metrics assess the percentage of agency accounts that are 61 days or 
more delinquent. Further, agencies are encouraged to develop 
additional charge card performance metrics to improve charge card 
management. 

Management plan. OMB guidance states that charge card management plans 
are important because they provide a description of how agencies will 
ensure, among other things, the ongoing effectiveness of risk and 
rebate management. Moreover, charge card management plans can provide 
a comprehensive mechanism for ensuring travel card program controls 
are followed and used effectively, as well as provide a road map on 
how agencies plan to enhance their risk management policies and 
practices, by requiring: 

* identification of key program officials and their responsibilities; 

* management controls, policies, and practices for ensuring 
appropriate travel card usage and oversight of payment delinquencies, 
fraud, misuse, or abuse; 

* an explanation of how available reports and data are used for 
monitoring delinquency and misuse, developing performance metrics, and 
addressing other program management issues; and; 

* a description of agency travel card training requirements. 

For example, OMB guidance on charge card management plans provides 
steps agencies must take to maximize rebates received from the travel 
card vendor, including strategies to ensure on-time payment of travel 
card bills. 

GAO has incorporated some management plan components cited by OMB 
procedures for monitoring and mitigating travel card misuse and 
delinquency and for recovering travel cards before employees leave the 
agency. Incorporating additional components would provide GAO with a 
more comprehensive approach on how the agency plans to (1) strengthen 
its risk management policies and practices and (2) ensure that its 
program controls are followed and used effectively. In addition, OMB 
guidance requires executive agencies to have a description of travel 
card managers' responsibilities for implementing risk management 
controls, policies, and practices to ensure they are effectively 
carried out. GAO has a travel card program coordinator to oversee its 
program and having written responsibilities for this coordinator 
position in a management plan would help ensure travel card program 
controls are followed and used effectively and that recent agency 
improvements in the program continue. 

Conclusion: 

Employee travel is essential to GAO's mission to support the work of 
Congress. As such, it's important that the agency's travel card 
program be managed effectively to reduce the risk of employee misuse 
and delinquency, as well as the risk of potential damage to GAO's 
reputation. To help improve management of this program, GAO needs to 
strengthen its policies and procedures for preventing and detecting 
travel charge card misuse and delinquency. And it is our view that the 
internal control standards and practices set forth in OMB Circular No. 
A-123, Appendix B would be effective and useful mechanisms for both 
assessing and improving GAO's internal controls over its travel card 
program. In response to our work, the agency has recently taken 
actions to improve the timeliness of employee travel card bill 
payments. Further improvements, such as developing additional program 
procedures and making greater use of OMB-cited internal controls and 
best practices, could help reduce the inherent risk of the program and 
support GAO in achieving its strategic goal of being a leading 
practices federal agency. 

Recommendations for Executive Action: 

To enhance GAO's policies and procedures for preventing and detecting 
misuse and delinquency in its travel charge card program, we recommend 
the Acting Comptroller General to direct the Acting Chief 
Administrative Officer to take the following seven actions: 

* Develop procedures to minimize the number of individually billed and 
centrally billed travel cards issued. 

* Create procedures to perform periodic reviews of the appropriateness 
of individually and centrally billed travel cards spending limits and 
related ATM cash advance limits to help ensure the effectiveness of 
travel card expenditure controls. 

* Develop and implement policies and procedures that describe the 
agency's requirements, time frames, and process for referring 
delinquent cardholders to the Office of Workforce Relations for 
consideration of disciplinary actions and for notifying the OIG of 
employees who are delinquent or have misused their travel cards. 

* Develop and report statistical and narrative information to support 
management decision making and to facilitate program policy compliance 
monitoring. 

* Establish a performance goal to gauge agency progress in reducing 
travel card payment delinquency. 

* Consider establishing a policy to use OMB Circular No. A-123, 
Appendix B in the agency's annual A-123 assessment of the 
effectiveness of the travel card program's internal controls. 

* Consider (1) adopting other internal controls and best practices 
identified in OMB Circular No. A-123, Appendix B that are not 
currently used in managing the travel card program and that could help 
reduce program risk, such as split pay disbursement and a charge card 
management plan, and (2) assessing annually or periodically whether 
any new or additional OMB controls and best practices should be 
adopted. 

Agency Comments: 

The Inspector General provided GAO with a draft of this report for 
review and comment. GAO agreed with our recommendations. The agency 
also provided technical comments that we incorporated, as appropriate.
Actions taken in response to our recommendations are expected to be 
reported to my office within 60 days. 

We are sending copies of this report to the other members of GAO's 
Executive Committee (the Acting Chief Administrative Officer and the 
Acting General Counsel), GAO's Controller, and GAO's Audit Advisory 
Committee. The report also is available at no charge on the GAO Web 
site at [hyperlink, http://www.gao.gov]. 

If you or your staff have any questions about this report, please 
contact me at (202) 512-5748 or garciaf@gao.gov. Contact points for 
GAO's Offices of Congressional Relations and Public Affairs may be 
found on the last page of this report. Key contributors to this report 
were Cathy Helm (Deputy Inspector General), Alan Belkin (General 
Counsel), and Kurt Kershow. 

Attachments: 

[End of section] 

Attachment I: Objective, Scope, and Methodology: 

To assess whether GAO's policies and procedures are effective in 
preventing and detecting travel charge card misuse and delinquencies, 
we interviewed GAO officials in charge of the travel card program, and 
U.S. Bank officials who provide travel card services to GAO, to 
understand their responsibilities, to determine how the program is 
managed, and to identify agency policies and procedures. In addition, 
we conducted a literature search to obtain information on federal 
government travel charge card programs and to identify challenges and 
solutions in reducing travel charge card misuse and delinquencies. 
This search identified reports by GAO, various inspector general 
offices, Congressional Research Service, and others. In addition, we 
reviewed federal management guidance and internal control standards to 
identify accountability requirements that apply to other federal 
agencies. 

We also reviewed GAO travel card program policy and procedures to 
understand how they help prevent and detect travel charge card misuse 
and delinquencies. Our criterion for reviewing GAO's policies and 
procedures was OMB Circular No. A-123, Appendix B, which establishes 
standard minimum requirements (including internal controls designed to 
minimize the risk of travel card misuse) and suggested best practices 
for executive branch agencies' travel card programs.[Footnote 22] 
Further, we also compared GAO's policies and procedures to best 
practices and other recommended controls of OMB Circular No. A-123, 
Appendix B to identify areas where GAO could strengthen management its 
travel card program. 

To test the effectiveness of the travel card program procedures, we 
performed a number of analyses of U.S. Bank transaction data for both 
employees with individually billed travel cards and for centrally 
billed travel cards. First, to assess the controls over the issuance 
of GAO travel cards to prevent misuse, we analyzed U.S. Bank total 
monthly travel card charge data for 3,071 employees with individually 
billed cards[Footnote 23] and 18 centrally billed cards that were 
available during the 16-month period we reviewed (December 2008 
through March 2010).[Footnote 24] We analyzed the data to assess 
whether and how frequently these cards were used. 

Second, to test the appropriateness of travel card spending limits as 
a control to reduce the risk of misuse, we analyzed U.S. Bank data for 
2,295 employees with individually billed cards and for six centrally 
billed cards that were used from December 2008 through March 2010. 
[Footnote 25] For individually billed cards, we analyzed the data to 
identify the maximum amount charged on the card in 1 month or 2 
consecutive months by employees over the 16-month period. We then 
determined if the maximum amounts charged by employees exceeded 
spending limits that GAO had set for these cards. We also conducted an 
analysis to identify the number and percentage of employees whose 
maximum 1- and 2-month spending amounts would have exceeded a range of 
lower spending limits. For centrally billed cards, we analyzed U.S. 
Bank transaction data for the same 16-month period to determine the 
maximum monthly amounts spent and how those maximum amounts compared 
with these cards' spending limits. 

Third, to test the effectiveness of GAO's monitoring of travel card 
delinquency,[Footnote 26]26 we analyzed U.S. Bank data on employees' 
payments for the 2,306 employees with individually billed cards that 
were used one or more times during December 2008 through April 2010 
(17 monthly billing cycles). We analyzed the payment data to determine 
if employees were delinquent in paying 1 or more times and the length 
of each delinquency—that is, whether employees were 1-30, 31-60, or 
and 60 or more days delinquent. 

We assessed the reliability of U.S. Bank data by (1) electronically 
testing the data to identify and address data anomalies, (2) 
interviewing U.S. Bank and agency officials knowledgeable about the 
data, and (3) obtaining and reviewing U.S. Bank information on the 
audits and controls the bank uses to ensure data reliability. We 
determined that the data were sufficiently reliable for the purposes 
of this report. 

We conducted this performance audit from December 2009 through 
December 2010 in accordance with generally accepted government 
auditing standards. Those standards require that we plan and perform 
the audit to obtain sufficient, appropriate evidence to provide a 
reasonable basis for our findings and conclusions based on our audit 
objective. We believe that the evidence obtained provides a reasonable 
basis for our findings and conclusions based on our audit objective. 

[End of section] 

Attachment II: OIG Analysis of Individually Billed Cardholders' Travel 
Card 1-Month and 2-Month Spending, December 2008 through March 2010: 

The following is OIG's analysis of individually billed cardholders' 
travel card highest and lowest 1-month and 2-month spending. For the 
period we reviewed (December 2008 through March 2010), most GAO 
employees had a $12,500 monthly limit and a consecutive 2-month limit 
on their travel cards of $25,000. Our analysis shows that for most GAO 
employees, actual spending was significantly lower for both the 
established limits and alternative limits. 

Table 1: Analysis of Individually Billed Cardholders' 1-Month Spending 
That Exceeded or Was under Actual and Alternative Spending Limits, 
December 2008 through March 2010: 

Spending limit: $12,500[A]; 
Employees under limit: 2,295; 
Percentage of employees under limit: 100%; 
Employees over limit: 0; 
Percentage of employees over limit: 0. 

Spending limit: $10,000; 
Employees under limit: 2,289; 
Percentage of employees under limit: 99.7%; 
Employees over limit: 6; 
Percentage of employees over limit: 0.3%. 

Spending limit: $8,000; 
Employees under limit: 2,279; 
Percentage of employees under limit: 99.3%; 
Employees over limit: 16; 
Percentage of employees over limit: 0.7%. 

Spending limit: $6,000; 
Employees under limit: 2,240; 
Percentage of employees under limit: 97.6%; 
Employees over limit: 55; 
Percentage of employees over limit: 2.4%. 

Spending limit: $4,000; 
Employees under limit: 2,104; 
Percentage of employees under limit: 91.7%; 
Employees over limit: 191; 
Percentage of employees over limit: 8.3%. 

Spending limit: $2,000; 
Employees under limit: 1,488; 
Percentage of employees under limit: 64.8%; 
Employees over limit: 807; 
Percentage of employees over limit: 35.2%. 

Source: OIG analysis of U.S. Bank data. 

[A] GAO's actual 1-month spending limit for the period we reviewed. 

[End of table] 

Table 2: Analysis of Individually Billed Cardholders' 2-Month Spending 
That Exceeded or Was under Actual and Alternative Spending Limits, 
December 2008 through March 2010: 

Spending limit: $25,000[A]; 
Employees under limit: 2,295; 
Percentage of employees under limit: 100%; 
Employees over limit: 0; 
Percentage of employees over limit: 0%. 

Spending limit: $20,000; 
Employees under limit: 2,295; 
Percentage of employees under limit: 100%; 
Employees over limit: 0; 
Percentage of employees over limit: 0%. 

Spending limit: $15,000; 
Employees under limit: 2,291; 
Percentage of employees under limit: 99.8%; 
Employees over limit: 4; 
Percentage of employees over limit: 0.2%. 

Spending limit: $10,000; 
Employees under limit: 2,276; 
Percentage of employees under limit: 99.2%; 
Employees over limit: 19; 
Percentage of employees over limit: 0.8%. 

Spending limit: $8,000; 
Employees under limit: 2,236; 
Percentage of employees under limit: 97.4%; 
Employees over limit: 59; 
Percentage of employees over limit: 2.6%. 

Spending limit: $6,000; 
Employees under limit: 2,125; 
Percentage of employees under limit: 92.6%; 
Employees over limit: 170; 
Percentage of employees over limit: 7.4%. 

Spending limit: $4,000; 
Employees under limit: 1,905; 
Percentage of employees under limit: 83%; 
Employees over limit: 390; 
Percentage of employees over limit: 17%. 

Spending limit: $2,000; 
Employees under limit: 1,168; 
Percentage of employees under limit: 50.9%; 
Employees over limit: 1,127; 
Percentage of employees over limit: 49.1%. 

Source: OIG analysis of U.S. Bank data. 

[A] GAO's actual 2-month spending limit for the period we reviewed. 

[End of table] 

[End of section] 

Attachment III: Comments from the Office of the Comptroller General of 
the United States: 

GA0: 
Memorandum: 

Date: December 2, 2010: 

To: Inspector General — Frances Garcia: 

From: [Signed by] Acting Comptroller General — Gene L. Dodaro: 

Subject: Agency Comments on Travel Cards Report: 

Thank you for the opportunity to review your draft report on GAO 
Travel Cards. I am pleased that you found GAO's policies and 
procedures to be generally effective in preventing and detecting 
travel charge card misuse. I also agree with your recommendations and 
note that opportunities exist to further strengthen the program.
As the result of your work we have already taken steps to enhance our 
current controls and implement additional controls. For example, as 
the result of our monitoring the agency's delinquency rate of 
payments, we have achieved and are sustaining a best practice rate of 
less than 1.5%. These and other actions already taken are described in 
further detail below. 

Completed Actions: 

* Prior to August 2010, the Office of Financial Management (FM) 
monitored payment delinquencies on an employee-by-employee, basis and 
not in aggregate. Since then, FM has performed monthly monitoring of 
the agency delinquency rate for individually billed account card 
holders. I am pleased to report that since beginning a more 
comprehensive monitoring of agency wide delinquencies, not only have 
we achieved the best practice performance level of 2% in our payment 
delinquency rate, we have actually reduced our delinquency rate to 
less than 1.5% for the agency for the last two months. 

* Based on empirical data of card use, FM has already: 

- Reduced the total number of centrally billed account card holders 
for the agency from 18 to 4; and; 

- Reduced the spending limit for individually billed travel cards from 
$12,500 per billing cycle to $7,500 per billing cycle. 

* FM formalized its current practices for handling delinquent 
cardholders in two Standard Operating Procedures (SOPs). The 
"Procedures for Monthly U.S. Bank Travel Charge Card Delinquency 
Reports" SOP outlines the agency's procedures, time frames and 
notification process of affected cardholders and their Managing 
Director. The "Salary Offset for Travel Charge Card" SOP outlines the 
agency's notification process of affected cardholders and their 
Managing Director, as well as the notification of GAO's Office of 
Workforce Relations. 

* FM has completed a draft Management Plan for the GAO Travel Card 
Program which is currently under review. After the plan is finalized, 
FM intends to develop a SOP based on the plan. 

* We have also gone beyond your recommendations and are in the process 
of working with the Offices of the General Council and Workforce 
Relations to revise the agency's Guide for Disciplinary Offenses and 
Penalties found in GAO Order 2751.1, to make the penalties for 
delinquencies clearer and more predictable for violations related to 
GAO charge cards, including the Travel Charge Card. 

In addition to these actions already taken, we agree to carry out the 
following future actions to respond to the recommendations in your 
report: 

Planned Actions: 

* In an effort to minimize risk associated with issued cards for all 
accounts, FM will develop procedures to regularly assess card use. 

* FM will analyze data and assess the appropriateness of lowering the 
$1,500 ATM cash advance for GAO travelers, especially for 
international travel. 

* FM will assess the relevant statistical and narrative reporting 
elements from OMB Circular No. A-123, Appendix B, and will consider 
incorporating them into the management, decision-making and compliance 
monitoring of the GAO Travel Card Program. 

* Agency Management will establish a GAO performance goal for the 
travel card payment delinquency rate and FM will continuously monitor 
this rate. 

* In consultation with the Senior Assessment Team for GAO's A-123/ 
Internal Control Review Program, the Program, Analysis and Operations 
Office (PAO) will assess the elements of OMB Circular No. A-123 
Appendix B, including the possibility of conducting a gap analysis, 
and make a decision as to the appropriateness of incorporating them 
into the annual review of GAO's Travel Cycle. 

A summary of the agency's completed and planned actions can also be 
found in the attachment to this letter. 

Finally, I would like to provide some clarifying information regarding 
our current notification and referral processes for those occasional 
cardholders who are delinquent - more than 61 days past due - in 
paying their travel charge card bill. Under this process our program 
coordinator first notifies the individual cardholder and their 
Managing Director if an employee is more than 40 days past due in 
making a payment, and puts them on notice that they may be subject to 
disciplinary action. The program coordinator also refers all 90-day 
past due cardholders who are eligible for salary offset to GAO's 
Office of Workforce Relations for action. Workforce Relations, in 
turn, then notifies your office as appropriate. Although FM has been 
routinely carrying out these procedures in practice, the procedures 
were not formalized in writing until recently in the "Salary Offset 
for Travel Charge Card" SOP. 

Further, regarding the salary offset notification process, on page 15 
of your draft report you stated that the travel charge card vendor, 
U.S. Bank, notified the GAO [travel card] program coordinator of two 
employees who were delinquent in their payments and that GAO could 
initiate the salary offset process. It is important to clarify that 
GAO cannot initiate a salary offset without prior notice from the 
vendor, and must first wait for that notification, as the cardholder 
agreement is with U.S. Bank. 

In closing, we appreciate your work in this area and your recognition 
of the steps we have already taken to manage and monitor employee use 
of GAO Travel Cards. As we strive to continuously improve the program, 
we are actively considering the recommendations in your report and 
implementing the appropriate actions, procedures and controls. 

Please contact me or Pam LaRue if you have any questions. 

cc: 
Cheryl Whitaker (ACAO): 
Lynn Gibson (AGC): 
Pamela LaRue (CASO): 
Joan Hollenbach (OGC): 
Eric Adams (HCO/Workforce Relations): 
Pamela Frere (CASO/PAO): 
John O'Connor (CASO/FM): 
Cathy Helm (OIG): 
Audry Britton (OIG): 

Table: OIG Report on GAO Travel Cards: December 2010: 

OIG Recommendation: Implement procedures to minimize the number of 
travel cards and review the appropriateness of travel cards spending 
and related ATM cash advance limits; 
GAO Actions: 
Completed Actions: 
* Reduced the total number of centrally billed account card holders 
for the agency from 18 to 4. 
* Reduced spending limits for individually billed travel cards from 
$12,500 to $7,500 per billing cycle and from $6,000 to $4,000 per 
billing cycle for GAO interns; 
Planned Actions: 
* Develop procedures to regularly assess card use. 
* Analyze data to assess the appropriateness of lowering the $1,500 
ATM cash advance. 

OIG Recommendation: Implement policies and procedures, including time 
frames, for referring delinquent cardholders for disciplinary action 
and notifying the OIG of actions taken; 
GAO Actions: 
Completed Actions: 
* Finalized two Standard Operating Procedures (SOP) related to 
handling delinquent cardholders:
- Procedures for Monthly U.S. Bank Travel Charge Card Delinquency 
Reports; 
- Salary Offset for Travel Charge Card. 

OIG Recommendation: Develop and report statistical and narrative 
travel card compliance information to oversight managers; 
GAO Actions: 
Planned Action: 
* Assess the relevant statistical and narrative reporting elements 
from OMB Circular A-123, Appendix B, and consider incorporating into 
the management, decision-making and compliance monitoring of travel 
cards. 

OIG Recommendation: Establish a goal to gauge agency progress in 
reducing delinquency; 
GAO Actions: 
Completed Action: 
* Beginning August 2010, performed monthly monitoring of the agency 
delinquency percentage rate for individually billed account card 
holders: 
Planned Action: 
* Establish and monitor a GAO performance goal for the travel card 
payment delinquency rate. 

OIG Recommendation: Review OMB Circular No. A-123, Appendix B, to 
identify and adopt, as appropriate, additional internal controls and 
best practices to help reduce travel card program risk and improve 
management's assessment of travel card program controls; 
GAO Actions: 
Completed Action: 
* Drafted a Management Plan, which is currently under review, for the 
GAO Travel Card Program; 
Planned Actions: 
* Assess the elements of OMB Circular A-123 Appendix B and, in 
consultation with the Senior Assessment Team, determine the 
appropriateness of incorporating them into the annual review of GAO's 
Travel Cycle; 
* Develop a SOP after the Management Plan is finalized. 

[End of table] 

[End of section] 

Reporting Fraud, Waste, and Abuse in GAO's Internal Operations: 

To report fraud, waste, and abuse in GAO's internal operations, do one 
of the following. (You may do so anonymously.) 

* Call toll-free (866) 680-7963 to speak with a hotline specialist, 
available 24 hours a day, 7 days a week. 

* Send an e-mail to OIGHotline@gao.gov. 

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[End of section] 

Footnotes: 

[1] Centrally billed travel cards are generally used by agency units 
to pay transportation expenses. 

[2] Government Charge Card Abuse Prevention Act of 2009, S. 942, 111th 
Cong., 1st Sess. (2009). Government Charge Card Abuse Prevention Act 
of 2009, H.R. 2189, 111th Cong., 1st Sess. (2009). 

[3] OMB Circular No. A-123, Appendix B, Improving the Management of 
Government Charge Card Programs (Jan. 15, 2009). 

[4] GAO Order 0201.3, Management's Responsibility for Internal 
Controls (Aug. 23, 2006). 

[5] U.S. Bank travel charge card delinquency data and OMB's Appendix B 
delinquency rate performance metric are based on a definition of 61or 
more days of delinquency. However, there appears to be a conflict with 
this definition in the Appendix B glossary, which defines delinquency 
as a charge card account balance that is unpaid for more than 61 days 
past the statement date. For the purpose of this report, the 
definition of 61or more days of delinquency is used since the 
available data is based on that definition. 

[6] GAO Order 0300.5, Government Accountability Office Travel Charge 
Card Program (May 5, 2010). 

[7] GAO, Standards for Internal Control in the Federal Government, 
[hyperlink, http://www.gao.gov/products/GAO/AIMD-00-21.3.1] 
(Washington, D.C.: November 1999). 

[8] OMB Circular No. A-123, Appendix A, Internal Controls Over 
Financial Reporting (July 2005). 

[9] OMB Appendix B applies to all types of government charge cards, 
including purchase cards and travel cards. 

[10] OMB Circular No. A-123, Appendix C, Requirements for Effective 
Measurement and Remediation of Improper Payments (August 2006). 

[11] GAO Order 0201.3. 

[12] GAO Order 0300.5. 

[13] GAO, Travel Cards: Control Weaknesses Leave Army Vulnerable to 
Potential Fraud and Abuse, [hyperlink, 
http://www.gao.gov/products/GAO-03-169] (Washington, D.C.: Oct. 11, 
2002). 

[14] Employees with credit restrictions had a $5,000 monthly limit, 
and GAO interns had a $6,000 monthly limit. 

[15] [hyperlink, http://www.gao.gov/products/GA0/AIMD-00-21.3.1]. 

[16] GA0, Department of Health and Human Services: Controls over 
Travel Program Are Generally Effective, but Some Improvements Are 
Needed, [hyperlink, http://www.gao.gov/products/GAO-03-334] 
(Washington, D.C.: Feb. 21, 2003). 

[17] Travel card accounts are past due when an unpaid balance is 
outstanding 31 days or more after the billing or closing date on the 
travel card statement. 

[18] U.S. Bank may cancel an account if it is 126 days past due from 
the closing date on the billing statement in which the unpaid charge 
first appeared or has been suspended twice during a 12-month period 
for nonpayment and is past due again on a payment not received within 
45 calendar days from the closing date on the billing statement. 

[19] See section 5 of the Government Accountability Office Act of 
2008, Public Law No. 110-323 (31U.S.C. § 705 (c) (7)). 

[20] Enterprise Service Center (ESC) is a shared services provider 
that supplies financial services to all DOT agencies, as well as 
client federal agencies external to DOT. ESC provides GAO with a 
number of financial services, including processing payments to 
reimburse travel expenses. 

[21] Agencies listed in the original Chief Financial Officers Act of 
1990 and the Department of Homeland Security are required to report 
statistical data every quarter and narrative information biannually. 
All other agencies report the data and information annually. 

[22] OMB Circular No. A-123, Appendix B, Improving the Management of 
Government Charge Card Programs (Jan. 15, 2009). 

[23] In certain cases, employees had more than one card—for example, 
when an employee lost a card and had a new card issued. For the 
employees who had more than one card, we combined the transaction data 
for all cards into one set of data. 

[24] Our analysis began in December 2008, the first month GAO travel 
cards were available for use under U.S. Bank. 

[25] For this analysis, we excluded the 776 individually billed cards 
and 12 centrally billed cards that were not used. 

[26] For purposes of this report, delinquency occurs when a travel 
charge card account has an unpaid balance that is outstanding 61 or 
more days after the billing or closing date on the travel card 
statement (not the date on which payment is due). 

[End of section]