A federal agency saw more than a tenth of its annual operations budget spent through employees’ use of government-issue credit cards. According to Blacklock's Reporter, auditors uncovered “purchases from unusual vendors” at the National Research Council..“We reviewed a sample of high risk transactions,” said an Audit Of Acquisition Card Management. “Certain deviations were noted including cases of contract splitting, inability to provide supporting documentation for purchases and wrong ledger accounts attributed to a purchase,” it added..Auditors said use of credit cards increased in 2020 when the Research Council had most employees work from home as a pandemic precaution. “Acquisition card expenditures represented 9% of the Council’s operating expenditures in 2018,” they wrote. “This percentage increased to 10% in 2021 and 13% in 2022. Due to its materiality, there are risks.”.The Research Council issued cards to 593 employees. Each had a $10,000 limit per transaction. However auditors found numerous cases of “potential contract splitting,” an unethical practice in which piecemeal payments are made for purchases over $10,000 to skirt Treasury Board rules..Auditors also found charges they marked as “cash advances,” “vehicle expenses,” “expenditures related to hospitality” and “purchases from unusual vendors.” The report did not elaborate..A Treasury Board Directive On Payments states federal credit cards are intended for “day to day expense items including maintenance services, lab supplies, office equipment, hospitality expenses and certain IT items with a dollar value below $500.” Numerous federal departments and agencies have failed audits regarding misuse of cards..A 2019 audit at the National Research Council identified a suspicious increase in card spending in the last days of the fiscal year that expires each March 31. Transactions in March were 231% higher than other months, it said..“Card spending increased by more than double the average monthly spending,” said the 2019 Audit Of Acquisition Card Management. “We noted the increased pressure to spend budgets at fiscal year-end was one of the main contributing factors behind this increase.”.“This gives rise to a financial management and reporting risk related to paying for goods before goods have been received or operational risks due to unnecessary purchases for goods or services,” said the report..Auditors found cases in which employees used their charge cards to buy souvenirs at the Research Council’s gift shop though the policy forbids spending on “decorations” or “mementos.” Other cards were used to ring-up $1.1 million in transactions though the cardholders were out of the office, suggesting employees had shared their card numbers with co-workers.
