Postal Service purchase cards are local buying credit cards employees may use when operational needs are not purchased through priority sources such as contracts and ordering agreements. Postal Service employees with delegated purchase card local buying authority (cardholders) may use the expense purchase card in accordance with purchase card policies and procedures and are required to obtain approval for purchases. Purchase card local buying authority is the authority to buy and pay for day-to-day operational needs up to $10,000. Cardholders must maintain records to support their purchases for three years. Our objective was to assess Postal Service purchase card transactions for potential non-compliance and for improper or erroneous payments.
We obtained fiscal year 2017 and 2018 Postal Service purchase card transactions from U.S. Bank, which is responsible for account setup, purchase card distribution, and transaction data. Our universe consisted of 1,267,693 transactions valued at about $622 million. We identified Postal Service high-risk transactions by merchant category code that were questionable due to policy restrictions for professional services, cleaning and maintenance, services & goods, meals, landscaping and lawn services, and travel. Additionally, we identified non-high-risk transactions consisting of the remaining transactions not included in the high-risk universe. Examples of non-high-risk transactions include towing services, wholesale uniforms, hardware stores, and general goods and services. We selected 516 transactions for review. We randomly selected a statistical sample of 208 transactions from the high-risk universe and 208 transactions from the non-high-risk universe. Lastly, we judgmentally identified questionable merchant category code transactions and selected 100 for review.
Generally, cardholders made purchase card transactions that were proper and supported. However, they did not always comply with approval and document retention policies. Of the 516 transactions, 147 were not compliant (28 percent). Specifically, 49 (9 percent) were missing purchase requests, 40 (8 percent) did not have required supporting documentation, and 58 (11 percent) were missing approved purchase requests and supporting documentation.
Moreover, there were seven instances where cardholders made improper or erroneous purchases leading to account closure or employee reimbursement. Five of the seven transactions were made in error due to cardholders unintentionally using the purchase card. These cardholders proactively made the Postal Service aware of these transactions for resolution. Lastly, the Postal Service determined two transactions to be fraudulent and closed the accounts prior to our review.
These issues occurred because cardholders did not retain required documentation due to changing jobs and misplacing it. Additionally, they are not required to store supporting documentation electronically and credit card approving officials are not required to review cardholder documentation when approving and certifying cardholder reconciliations to monthly billing statements. Approval and certification are required to ensure the accuracy of the statement and identify any potential billing discrepancies.
Finally, cardholders are required to reconcile their purchase card statements of account to supporting documentation, but purchase card policy does not require cardholders to provide supporting documentation to credit card approving officials for approval and certification.
We calculated over $75 million annually in expense purchase card payments were made without proper approvals and not supported by documentation.
We recommended management:
- Reiterate document retention requirements to purchase cardholders and credit card approving officials.
- Enhance the purchase card policy to require cardholders electronically retain purchase card documentation when possible.
- Explore the benefits of providing electronic documentation to credit card approving officials and update purchase card policy to require credit card approving officials review all purchases over established minimum thresholds and when merchant category codes are questionable.