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The U.S. Department of Housing and Urban Development (HUD), Office of Inspector General audited HUD’s compliance with the purchase card program requirements for fiscal years 2017 and 2018 based on our risk assessment. Our audit objective was to determine whether HUD maintained accurate records of cardholders and transactions; HUD employees took purchase card training when required; and HUD purchase cards were used for illegal, improper, or erroneous transactions.

HUD did not have accurate and complete records of cardholders and transactions, including errors in cardholder closure dates, errors in training dates, inadequate tracking of merchant category code (MCC) overrides, and incomplete transactional data.  In addition, purchase cardholders and approving officials did not always take purchase card training when required. Further, we identified 10 instances in which HUD purchase cards were used for improper purchases and incurred improper interest charges totaling $29,423.

We recommend that the Chief Procurement Officer (1) implement processes to periodically audit or reconcile the shared service provider’s records, (2) review hierarchies, (3) ensure that training is taken when required, (4) suspend cardholders or approving officials who fail to take training or repeatedly cause HUD to pay interest, and (5) research the incomplete monthly transactional data and identify a solution. In addition, we recommend that the Chief Procurement Officer (1) enhance the process to periodically analyze data for split transactions or improper MCCs, (2) improve notifications to employees, and (3) follow up on any potential issues identified.

Recommendations

Key Details
(mouse over or click items for details)
  Open
  Closed
Funds Put to Better Use
Funds Put to Better Use

Recommendations that funds be put to better use estimate funds that could be used more efficiently. For example, recommendations that funds be put to better use could result in reductions in spending, deobligation of funds, or avoidance of unnecessary spending.

Questioned Costs
Questioned Costs

Recommendations with questioned costs identify costs: (A) resulting from an alleged violation of a law, regulation, contract, grant, or other document or agreement governing the use of Federal funds; (B) that are not supported by adequate documentation (also known as an unsupported cost); or (C) that appear unnecessary or unreasonable.

Sensitive
Sensitive

Sensitive information refers to information that could have a damaging import if released to the public and, therefore, must be restricted from public disclosure.

Priority
Priority

We believe these open recommendations, if implemented, will have the greatest impact on helping HUD achieve its mission to create strong, sustainable, inclusive communities and quality affordable homes for all.

Chief Procurement Officer

  •   2020-KC-0001-001-A

    Closed on October 24, 2022

    Implement a process to periodically audit or reconcile ARC’s records.

  •   2020-KC-0001-001-B

    Closed on May 18, 2020

    Implement a process to periodically review approving officials’ span of control to ensure that the requirement is not exceeded.

  •   2020-KC-0001-001-C

    Closed on May 18, 2020

    Implement a process with ARC to ensure that cardholders and approving officials are notified before purchase card training is due to allow training to be completed in a timely manner.

  •   2020-KC-0001-001-D

    Closed on May 18, 2020

    Implement a process to ensure that purchase cards are suspended when a cardholder or approving official fails to complete training.

  •   2020-KC-0001-001-E

    Closed on May 18, 2020

    Research why ARC provided incomplete monthly transactional data and identify a solution to ensure the completeness of future transmissions.

  •   2020-KC-0001-002-A

    Closed on October 24, 2022

    Enhance the process to periodically analyze data for split transactions or improper MCCs and follow up on any potential issues identified.

  •   2020-KC-0001-002-B

    Closed on May 18, 2020

    Require ARC to update its MCC tracking log, to include the amount, the date of MCC override removal, and staff assigned, to ensure that an override is removed after the approved purchase is made.

  •   2020-KC-0001-002-C

    Closed on May 18, 2020

    Implement a process with Citibank and ARC to provide global notifications to cardholders and approving officials before autoclosures of credit card statements.

  •   2020-KC-0001-002-D

    Closed on May 18, 2020

    Implement a process to suspend cardholders or approving officials who repeatedly cause HUD to pay interest.

  •   2020-KC-0001-002-E
    $1,807.00

    Closed on May 18, 2020

    Obtain supporting documentation for the $1,807 spent on two cardholders’ purchase cards or require the vendors or cardholders to repay the funds to the applicable HUD program.