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Widespread Abuse of Government Charge Cards

For years, the federal government has struggled to provide sufficient oversight over its government credit card program—and a string of new audits reveals that it is still an ongoing and costly problem.

The whole point of government credit cards is to streamline the federal procurement processbut without proper supervision over what is being purchased—millions of dollars are misused and abused by federal employees.

Daniel Acker | Bloomberg | Getty Images

Just last week, the Labor Department's Inspector General said Job Corps' workers and students had used their cash cards—intended for travel—to pay for personal items like phone bills, shopping sprees at J.C. Penney and trips to the hair salon, The Washington Times first reported.

The auditors identified at least $250,000 in improper purchases; however, they said that number is likely significantly higher, since they flagged at least $4 million as "questioned purchase card transactions."

"In total, we believe improved internal controls could result in better use of an estimated $5.1 million in Job Corps funds," the IG said.

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The report revealed that no one had checked the credit card receipts and noted that Job Corps doesn't have any procedures in place for its staff to review or monitor the cash card expenses, resulting in "hundreds of thousands of dollars in government funds" that "were misused or wasted."

The abuse was reported at 98 of the 125 centers nationwide.

But it's not just Job Corps that has a spending problem.

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Last week, the Veterans Affairs Department Inspector General also reported the misuse of nearly $650,000 in credit card purchases.

Similarly, The Environmental Protection Agency has also come under fire for a lack of oversight over its government charge cards. In March, the EPA's IG said some of the agency's employees had used their federal charge cards to buy personal items like gym memberships for themselves and their family members, lavish dinners and DVDs. A sample of charges totaling $152,600 in 2012 showed that half of that, or about $79,300, were "prohibited, improper and erroneous."

The Internal Revenue Service has also had a number of issues with employees abusing their taxpayer-funded credit cards. Last year, a slew of audits revealed that IRS workers were charging their cards for smart phones, romance novels, baby clothes, diet pills and pornography.

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In one case, $2,500 worth of personal items was charged to an agency credit card. Like the Job Corps, the VA and the EPA, the auditors faulted the IRS for not having oversight over its credit card program. The IG even noted that the agency had no procedure in place to cancel credit cards when employees leave the agency.

The widespread abuse even prompted Congress to pass legislation in 2012 that required federal agencies to review their purchase card programs. New guidelines issued by the Office of Management and Budget even warn that workers caught improperly charging their cards could face dismissal.

Regardless, the problem persists and auditors still say some agencies continue failing to conduct reviews, leaving more money vulnerable to waste and abuse.

There's a presumption in the private sector that anyone with a corporate or government credit card must fill out a monthly expense report, detail the expenses with receipts, and submit that report to his or her direct supervisor for approval.

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Some companies have software that automatically rejects certain expenses - just as a health care spending card can't buy candy at the drug store.

Once again, the competence of government IT systems as well as the managers in charge of spending taxpayer dollars are in question.

—By Brianna Ehley of The Fiscal Times

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