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Report Fraud, Waste and Abuse
January 31, 2020
  • Deputy Secretary
2020-KC-0001
2020-KC-0001.pdf

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
Recommendation Status Date Issued Summary
2020-KC-0001-001-A Closed January 31, 2020 Implement a process to periodically audit or reconcile ARC’s records.
2020-KC-0001-001-B Closed January 31, 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 January 31, 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 January 31, 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 January 31, 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 January 31, 2020 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 January 31, 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 January 31, 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 January 31, 2020 Implement a process to suspend cardholders or approving officials who repeatedly cause HUD to pay interest.
2020-KC-0001-002-E Closed January 31, 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.