Purchase Cards: Control Weaknesses Leave DHS Highly Vulnerable to Fraudulent, Improper, and Abusive Activity

In the wake of the 2005 hurricanes in the Gulf Region, GAO and the Department of Homeland Security Office of Inspector General (DHS OIG) initiated a number of audits and investigations addressing the federal government's response to those events. Department of Homeland Security (DHS) cardholders made thousands of transactions related to hurricane rescue and relief operations. GAO, working with DHS OIG, interviewed DHS personnel and reviewed purchase card policies and procedures to assess the control environment. GAO and DHS OIG conducted statistical tests from a random sample of transactions and performed data mining on all DHS purchase card transactions for a 5-month period beginning in June 2005. GAO and DHS OIG looked at all transactions in this period because the database did not distinguish hurricane related from routine purchases. GAO and DHS OIG used the testing results to determine the extent of control weaknesses and identify instances of fraud, waste, and abuse. This testimony addresses whether (1) DHS's control environment and management of purchase card usage were effective; (2) DHS's key internal control activities operated effectively and provided reasonable assurance that purchase cards were used appropriately; and (3) indications existed of potentially fraudulent, improper, and abusive or questionable purchase card activity at DHS.