Review of the Food and Drug Administration's Internal Controls Over Its Purchase Card Activities

EXECUTIVE SUMMARY:

This final report presents the results of the Office of Inspector General's review of internal controls over purchase card activities at the Food and Drug Administration's (FDA) headquarters components. The FDA began using the VISA purchase cards in 1989. The Purchase cards work much like personal credit cards, enabling designated FDA employees to purchase goods or services costing, for the most part, $2500 or less without much of the administration and paperwork required by the standard procurement system. We found that FDA had not formally assessed the effectiveness of compensating controls over the use of purchase cards. Such controls are necessary because certain basic controls, such as separation of duties, are inherently missing in the purchase card system. We recommended that FDA evaluate the effectiveness of compensating controls over the purchase card system. We also found several minor problems with FDA's use of purchase cards. We found that FDA had improperly paid State sales tax in 3 of 174 randomly selected transactions, and in one instance did not properly enter in its property management records 2 sensitive accountable property items. We also noted that the FDA's Division of Accounting leased a software package for $24,900, to automate its purchase card activities without coordinating with FDA's Office of Information Resources Management which is responsible for such initiatives. The FDA concurred with all of our findings and our recommendation that FDA evaluate the effectiveness of compensating controls over the purchase card system.

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