Federal Acquisition Service U.S. General Services Administration Effective Oversight of Your GSA...

Federal Acquisition Service

U.S. General Services Administration

Effective Oversight of Your GSA SmartPay® 2 Program (Intermediate)

Effective Oversight of Your GSA SmartPay® 2 Program (Intermediate)

Phillip MyersElizabeth SkolnikGSA Training Conference & ExpoMay 4-6, 2010

Phillip MyersElizabeth SkolnikGSA Training Conference & ExpoMay 4-6, 2010


Value to the Customer

Understand the difference between fraud, waste, and misuse

Improve ability to identify potential misuse by cardholders

Understand consequences of waste, fraud and abuse

Learn and share general charge card management best practices

Learn about relevant legislation and regulations

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Agenda

GSA SmartPay® Program Overview

GAO Report on Governmentwide Purchase Cards (GAO-08-333)

Understanding and Preventing Waste, Fraud, and Abuse

Roles and Responsibilities

General Charge Card Management Best Practices

Resources and Contacts

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GSA SmartPay® Program Overview The GSA SmartPay® program enables over 350 Federal agencies,

organizations, and Native American tribal governments to obtain charge card products and services through Master Contracts that GSA has currently established with three banks: Citibank, JP Morgan Chase, and U.S. Bank

The GSA SmartPay® program provides charge cards to federal employees to make official government purchases and use of the cards should be in accordance with agency/organization-specific policy

There are many benefits to using GSA SmartPay® charge cards, and with these benefits come certain responsibilities for cardholders and A/OPCs

DID YOU KNOW…

$941 was charged on the GSA SmartPay® charge card every second in FY 09


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Preventing Waste, Fraud and Abuse


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GAO Report on Government Purchase Cards

In March 2008, GAO released a report that analyzed purchase card transactions government-wide related to the GSA SmartPay® 1 program to:

• Determine if internal control weaknesses existed in the government purchase card program

• Identify examples of fraudulent, improper, and abusive activity

What GAO Found: Internal control weaknesses in agency/organization

purchase card programs exposed the federal government to fraud, waste, abuse, and loss of assets

Source: GAO-08-333


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GAO RecommendationsGSA and Dept of Treasury work with Agencies/Organizations to:

Improve internal controls over the government purchase card program

Provide guidance on how cardholders can document independent receipts and acceptance of items obtained with a purchase card

Remind cardholders to obtain prior approval or subsequent review of purchase activity for purchase transactions that are under the micro purchase threshold

Strengthen monitoring and oversight of purchase cards

Source: GAO-08-333


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GAO Recommendations (cont’d)GSA and Dept of Treasury work with Agencies/Organizations to:

Remind travelers who receive government-paid-for-meals at conferences or other events, they must reduce the per diem claimed on their travel vouchers by the specific amount that GSA allocates for the provided meal

Provide agencies/organizations guidance regarding what should be considered sensitive and pilferable property (e.g. computers, palm pilots, digital cameras, fax machines, can be easily converted to personal use)

Cancel convenience check privileges of cardholders who improperly use these checks

Source: GAO-08-333


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Fraud vs. Misuse Fraud: A person or entity other than the cardholder makes

transactions using the cardholder’s account Misuse: Cardholder uses his/her own card for transactions

not permitted per policy In the case of government charge cards, intentional use of

the government charge card for other than official government transactions constitutes misuse, and may involve fraud

The cardholder is liable for all transactions classified as misuse

DID YOU KNOW…Misuse by employees impacts the performance of agency/organization program and rebate earnings potential


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Examples of Fraud and Misuse Personal use or unauthorized purchases

Use for or by someone other than the cardholder

Purchases from an unauthorized merchant

Purchases which are not authorized by the agency

Purchases for which there is no funding

Purchases for personal consumption

Purchases which do not comply with Federal Acquisition Regulation (FAR) and/or other applicable procurement statues and regulations


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Non-Cardholder Fraud

Non-cardholder fraud involves use of the card or cardholder data by an unauthorized person

High-risk situations for non-cardholder fraud include:

• Card was never received

• Card was lost

• Card was stolen

• Altered or counterfeit cards


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Phishing: Example of Non-cardholder Fraud

Have you ever received an email similar to this? Gone Phishing?

With fraud on the rise, it is imperative that A/OPCs and cardholders learn to recognize criminal methods in order to protect their GSA SmartPay® charge cards.


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Possible Indicators of Fraud and Misuse Merchant Category Code (MCC) appears to be outside the

cardholder’s general area of responsibility Account has been closed due to fraud and a new card has been

reissued Cardholder frequently disputes transactions Cardholder has had multiple authorizations declined Cardholder makes transactions on non-work days Cardholder consistently hits his/her monthly limit Merchant address appears to be a home address

Cues to misuse and abuse can be determined by asking “Who”, “What”, “Where”, “When”, “Why” and “How Much”


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Possible Indicators of Fraud and Misuse (cont’d)

Cardholder has several transactions with the same merchant within a short period of time (e.g., 48 hours), and the transactions total more than $3,000 (micro-purchase threshold)

Cardholder is unable to provide proof of purchases such as receipts

Cardholder has multiple transactions of even dollar limits (e.g., $20, $100)

Cardholder repeatedly does business with the same merchants (minimal rotation of sources)


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Consequences of Fraud and Misuse Employing agency/organization of a cardholder who misuses the card or

who participates in fraud may cancel the GSA SmartPay® charge card and take disciplinary action against the employee, as appropriate

In case of card misuse, employee will be held personally liable to the government for the amount of any unauthorized (non-government transaction)

Additional consequences include:• Reprimand• Counseling• Cancellation of card• Notation in employee performance evaluation• Suspension or termination of employment• Criminal prosecution

DID YOU KNOW…Many agencies/ organizations have their own policies for consequences related to fraud and misuse.


Program Oversight - Roles & Responsibilities


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Addressing Misuse/Abuse and FraudWhat happens if fraud has already taking place? Program Coordinators* are responsible for reporting any

suspected or actual fraud to your contracting bank or agency’s Inspector General

If fraud is suspected of a cardholder, merchant, or other third party, A/OPCs may file a complaint with the agency/organization Inspector General

Many agencies/organizations provide a fraud hotline number for reporting misuse/abuse and fraud

Contact your GSA SmartPay® 2 contracting bank to see what tools and resources they provide for eliminating fraud and misuse

*Note: Program Coordinators include: Agency/Organization Program Coordinators (A/OPCs, Fleet Managers, etc.)


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Roles & Responsibilities of A/OPCsA/OPC responsibilities, as they relate to fraud and misuse include: Promote appropriate use of GSA Smart Pay® Charge Card by

cardholders Establish internal policies and procedures Take appropriate action regarding charge card waste, fraud or

abuse Provide cardholders with “Helpful Hints” for Card Use brochure Ensure cardholders receive appropriate training and take

refresher training at a minimum once every three years, or more frequently (as required by your agency/organization)

Monitor account activity and managing delinquencies


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Roles & Responsibilities of Cardholders

Cardholder responsibilities, as they relate to fraud and misuse include:

Use the charge card appropriately, in accordance with agency/organization policy, laws, and governmental regulations

Understand preventative measures to avoid fraud and misuse Understand GSA SmartPay® Charge Card liabilities Keep up-to-date with required program and agency/organization

specific training, including refresher training Review and understand “Cardholder Dos and Don’ts” available

on the GSA SmartPay® website


Establish Internal Policies A/OPCs should establish clear policies for their agency/

organization to prevent cardholder misuse by outlining: Timeframes for cancelling inactive cards and cards for

exiting/retiring employees Controls on cards – credit, single purchase limit, Merchant

Category Codes (MCCs), etc. Cash advances and convenience check limits Eligibly Cardholders Who should have authority to make changes to accounts

Cardholders should be aware of agency/organization policies

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Establish Internal Procedures A/OPCs should establish clear procedures to prevent misuse by

explicitly outlining the following: How to cancel GSA SmartPay® charge cards How to determine if unauthorized users have access to cards How to obtain, change, and close an account Policy and refresher trainings for cardholders and users Reconciliation process Audit process and frequency Authorization controls

Cardholders should be aware of agency/organization procedures

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Risk Management ControlsA/OPCs should establish risk management controls to

prevent misuse: Set reasonable credit limits Restrict use through MCC Blocks Limit Cash Access Use reporting tools to monitor card usage Manage delinquency Implement proper training for cardholders Maintain training certificates in a database or personnel

records

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Charge Card Management Oversight


Leading Practices Engage management at the highest levels Review credit limits and lower as appropriate Issue cards based on need, versus title Perform an annual review of all issued cards to determine if

each cardholder meets the criteria for continued participation in the federal government purchase charge card program

Incorporate process to enable an alternate point of contact to receive and accept material

Utilize your GSA SmartPay® 2 contracting bank’s resources Create a newsletter to reinforce agency/organization charge

card policies and procedures

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Lead Practices (cont’d)

Provide the GSA SmartPay® card-sized booklet, “Helpful Hints for Purchase Card Use”, with each cardholder application

Publish frequently asked questions (FAQs) related to the purchase card on your agency’s/organization’s website

Eliminate manually performing data analysis by developing ad hoc reports that can be generated as needed

Perform an annual review of all issued cards to determine if each cardholder meets the criteria for continued participation in the federal government purchase charge card program

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Leading Practices: Payment Reconciliation Reconcile frequently, at least

once a month Reconcile interface files/mappers

to statements/invoices Confirm payment and generate

invoice status reports Review payment reconciliations

to ensure agency and bank records agree

Monitor the status of disputed transactions

Benefits of Payment Reconciliation:• Avoid hidden delinquencies• Frequent reconciliation

leads to smooth program close-out

• Avoid out of balance conditions between agencies/organizations and issuers

Contact your GSA SmartPay® 2 contracting bank to learn about the tools they provide you with to assist in the payment reconciliation process


Leading Practices: Reporting

Monitor reports regularly Use reports proactively, not

reactively Understand and familiarize

yourself with all available reports

Develop ad hoc reports

Benefits of Reports:• Allow A/OPCs to oversee their GSA

SmartPay® charge card program’s overall financial condition

• Monitor for potential fraud/waste/abuse

• Provide invoice, payment, and refund data

• Supply necessary data to fulfill OMB requirements

GSA SmartPay® 2 contractor banks are required to issue a set or reports to A/OPCs (determined by the agency/organization) that cover topics such as transactions, payments, disputes, delinquencies

A full listing of agency reports can be found in section C.3.3.1 of the GSA SmartPay® 2 Master Contract


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Leading Practices: Training

Provide a comprehensive face-to-face cardholder training as orientation for new cardholders

Discuss agency/organization policy

Ensure cardholders and A/OPCs fulfill the required refresher training requirements at a minimum every three years, or more frequently per agency/organization policy

Ensure that training is easily accessible Engage in bank-provided training Attend GSA SmartPay® Annual Training Conference


Leading Practices: State/Local Tax Exemption Merchants are required to recognize the tax exempt status of official

Federal Government purchase, travel, fleet, and integrated charge card transactions Some merchants do not exempt state or local taxes on

purchases Each state has different policies and procedures around the tax

exemption of purchases made with GSA SmartPay® cards The GSA SmartPay® website provides information on each state’s

requirements; often cardholders will need to print a “tax exemption” certificate to provide the merchant Visit the GSA SmartPay® website and click on “tax information”

to view updated state information for GSA SmartPay® 2 Tax exemption and recovery plans and processes are an important

part of managing your charge card program


Resources & Contacts


Training Resources Other GSA SmartPay® Courses offered at Expo:

Navigating the New GSA SmartPay® Website (Basic) GSA SmartPay® Program Update (Advanced) Your GSA SmartPay® 2 – The Basics of Travel, Purchase, Fleet &

Integrated Charge Cards (Basic) GSA SmartPay® Online Training:

GSA SmartPay® Travel Cardholder and A/OPC Training GSA SmartPay® Purchase Cardholder and A/OPC Training GSA SmartPay® Fleet Cardholder and A/OPC Training – coming

soon On-site training with banks Training Sessions at GSA SmartPay® Conference Materials Available online, and hard copies may be ordered via the GSA

SmartPay® website 31


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QuestionsPlease provide your feedback and thoughts about the current

and future program at: www.gsa.gov/gsasmartpayunder “GSA SmartPay® Program Feedback Form”

Contact UsPhillip Myers, [email protected]

Elizabeth Skolnik, [email protected]

GSA SmartPay® Program Support Phone: (703) 605-2808

E-mail: [email protected]

www.gsa.gov/gsasmartpay


Thank you!

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