Bankcard Program Problem Prevention and Increased Monitoring for Management Control. From: "John Peterson" Message-Id: <960927135007.ZM18343@mailid> Date: Fri, 27 Sep 1996 13:50:06 -0400 X-Mailer: Z-Mail 4.0.1 (4.0.1 Apr 9 1996) To: "USGS Employees" Subject: All Employee E-Mail: Bankcard Program Mime-Version: 1.0 Content-Type: text/plain; charset=us-ascii Content-Transfer-Encoding: 8bit To: All Employees September 27, 1996 From: John K. Peterson, Acting Chief, Office of Acquisition & Federal Assistance Office of Program Support Subject: Bankcard Program Problem Prevention and Increased Monitoring for Management Control. INTENDED AUDIENCE FOR THIS E-MAIL MESSAGE: Since one-third of all United States Geological Survey (USGS) employees are either bankcard holders or approving officials in the bankcard program, a bureau-wide e-mail notice is the most effective way of notifying card holders, approving officials and their supervisors of the below information. If you are aware of any cardholder or approving official who does not have e-mail access, please pass this information on to them. If you are not currently a cardholder, but have a need to make simple purchases to assist in the performance of your job and are interested in becoming a cardholder, see your local division administrative personnel. If you are not a cardholder, an approving official, or someone who supervises such personnel, you need not read any further. BACKGROUND: >From pilot project beginnings in fiscal year 1990 of less than $150,000 in value, USGS's bankcard program has grown explosively in the last two years. Despite this year's budget fiasco and furloughs, bankcard dollar volume this fiscal year surpassed $21 million on more than 84,000 transactions made by nearly 3,000 cardholders. The program now represents more than 80% of the small purchases made by the USGS. PROBLEM PREVENTION: While we are certain that the vast majority of purchases are within the limits and spirit intended by the program, it would not take too many significant errors to detrimentally effect the program for all users. Ongoing investigations by the Inspector General and recent reviews by Office of Program Support (OPS) procurement personnel of field office card use have disclosed a disconcerting number of improper purchases and inadequate oversight by approving officials. In one case, a cardholder was able to make apparently fraudulent purchases over several months totaling more than $25,000. These findings point up the need for all program participants to be more vigilant on the following matters: 1. Tightening Up Approving Officials' Reviews -- Approving officials' review of monthly cardholder statements is the primary safeguard against waste, fraud and other misuse by cardholders. Every approving official receives a report each month from the bank summarizing activity by all his/her assigned cardholders. Approving officials must make sure they receive an annotated statement for review and approval from each cardholder showing any activity on that month's report. Approving officials must, before signing the bank statement, assure that the cardholder has fully documented the transaction on the description line of the statement. The approving official also needs to review the cardholder's transaction log sheets and vendor receipts or packing slips. 2. After-the-fact payment authorization -- Use of the bankcard as a payment mechanism for a purchase made or liability created before the cardholder provided the bankcard charge authorization to the merchant is not proper. This type of transaction legally represents a ratification. Ratifications may only be processed by OPS warranted contracting officers. (See Survey Manual 401.12.) 3. Prohibited or restricted items -- The USGS bankcard handbook listing of commodities for which the card may not be used should be checked regularly. For example, GSA prohibits the use of the card for telecommunications services, yet we have noticed a number of charges for cellular phone service, which are improper according to GSA's contract. All program participants have been provided copies of the handbook and it is available on-line to USGS employees at the OPS Customer Service Homepage, www.usgs.gov:8888/usgs-manual/handbook.html. 4. Splitting of requirements -- It is inappropriate to split requirements into two or more smaller purchases so that orders can be placed using the bankcard. 5. Property tracking -- In addition to reporting leases of property to the USGS Property Management Branch, your division's procedures for reporting, marking and tracking non-controlled property acquired via the bankcard also must be followed. 6. Use of the card by other than the cardholder is strictly prohibited-- Cardholders are reminded that they are personally responsible for all purchases made with their cards. Please make sure you safeguard your card to insure that no one else can use it or place charges against your account. ENHANCED MONITORING OF THE BANKCARD PROGRAM: The Office of Acquisition and Federal Assistance (OAFA) in OPS, which manages the bankcard program in USGS, is responsible for monitoring the use of cards as a purchasing tool and for assuring that appropriate controls are in place. Up until this point, OAFA and the Office of Financial Management (OFM) have monitored the program on an exception basis, primarily by reviewing the copies of the billings sent to OFM. The explosive growth in the program and Remote Data Entry (RDE) of payment data into the Federal Financial System (FFS) by many offices necessitate development of alternate monitoring procedures. OFM is establishing a statistical sampling process to monitor Remote Data Entry transactions, including cardholder purchasing activities, and will be issuing an instructional memorandum on that process shortly. OAFA will participate in OFM's review of bankcard transactions. We have also begun screening additional reports from the bank and will be contacting a number of individual cardholders and/or approving officials each month for information on selected transactions. We are aware that this process will pose some inconvenience for those cardholders whose transactions are selected for review each month. We believe that these review steps are necessary to assure that significantly more restrictive management controls are not imposed upon this successful program which would greatly diminish the utility of the bankcards for all users. Because the impact of RDE was not contemplated in the last printed revision of the handbook, it currently states that all cardholder's original bank billing statements must be forwarded to OFM. This requirement is hereby suspended for Water Resources Division's RDE locations, see the latest electronic version of the handbook on the OPS Services webpage listed above. Statement submissions for RDE locations instead will be governed by OFM's statistical sampling policy. CHANGE BY THE BANK IN CALCULATING 30 DAY LIMITS: We have received a number of inquiries regarding a change recently made by the bank in calculating the 30-day limits. Although our billing cycle continues to close on the 13th of each month, the bank now calculates the 30-day limits from the 1st of each month. Unfortunately, we were not notified before this change was made, and a number of our cardholders had problems when the bank applied the existing 30-day limits over the 49-day transition period (7/14 - 8/31). We apologize for the confusion and inconvenience. Since charges applied to the 30-day limits reset to $0 as of 9/1, the problem of cardholders being restricted by this limit should now be resolved. Cardholders/approving officials who still find their 30-day limit insufficient can request increases from Margaret Seaboy (telephone: 703-648-7350; fax: 703-648-7901; e-mail: mseaboy@usgs.gov).