TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION

Office of Audit

Review of the Internal Revenue Service’s Purchase Card Violations Report and the Status of Recommendations

Final Report issued on January 25, 2018

Highlights 

Highlights of Reference Number:  2018-10-018 to the Internal Revenue Service Commissioner for Operations Support.

IMPACT ON TAXPAYERS

Federal audits of agency charge card programs have found varying degrees of fraud, waste, and abuse.  On October 5, 2012, the President signed into law the Government Charge Card Abuse Prevention Act of 2012 (Charge Card Act), which reinforced Administration and congressional efforts to prevent fraud, waste, and abuse of Government-wide charge card programs.

WHY TIGTA DID THE AUDIT

This audit was initiated because the Charge Card Act requires each agency with more than $10 million in purchase card spending in the prior fiscal year to submit semiannual reports of employee purchase card violations and the disposition of those violations, including any disciplinary actions taken.  Inspectors General must annually report to the Director of the Office of Management and Budget 120 days after the end of each fiscal year on agency progress in implementing purchase and travel card audit recommendations.  The overall objective of this review was to assess the IRS’s compliance with the law’s requirements for the period April 1 through September 30, 2017.

WHAT TIGTA FOUND

The IRS identified and reported six instances of confirmed purchase card misuse and 21 instances of purchase card misuse pending final agency action.  The six confirmed purchase card misuse cases reported by the IRS collectively totaled $134.

In addition to the 27 confirmed and pending misuse cases reported in the IRS semiannual violations report, the IRS also identified 45 purchase card transactions totaling just over $75,000 that the IRS determined to have met the Charge Card Act’s definition of administrative matters (policy noncompliance).  These cases included 13 instances of split purchases totaling almost $62,000.

Similarly, the IRS identified another 42 instances totaling more than $15,000 of prohibited purchases being made.  The purchases were prohibited from being made or the purchases were made for valid business needs but the cardholder did not have the authority to purchase the items.

TIGTA also reviewed the IRS’s current charge card guidance and determined that policies and controls have been established and designed to mitigate the risk of fraud and inappropriate Government travel and purchase card practices, including controls that address centrally billed travel card accounts.  In the Fiscal Year 2017 Annual Assurance Statement under the Federal Managers’ Financial Integrity Act of 1982, the IRS affirmed that these policies were in place.

Finally, TIGTA reviewed the Joint Audit Management Enterprise System to determine the status of open recommendations associated with IRS purchase and travel cards in audit reports issued over the past five fiscal years (Fiscal Years 2013 through 2017).  TIGTA found no open recommendations associated with purchase or travel card findings.

WHAT TIGTA RECOMMENDED

TIGTA made no recommendations as a result of the work performed during this review.  However, IRS officials reviewed the report and agreed with the report’s conclusions.

READ THE FULL REPORT

To view the report, including the scope, methodology, and full IRS response, go to:

http://www.treasury.gov/tigta/auditreports/2018reports/201810018fr.pdf.