DHS report warns of credit, debit fraud risk posed by cards issued to employees

Despite a legal requirement to stamp out federal worker credit card abuse, the Homeland Security Department still faces a “moderate risk” that the credit and debit cards it issued its employees will be used for illegal or fraudulent purchases, according to an internal warning that found department officials in some case ignored important safeguards.

The report by Homeland’s inspector general comes years after the agency’s FEMA office experienced widespread credit card abuse in the aftermath of the Hurricane Katrina disaster and after President Obama signed a law, requiring the agency to stamp out such problems.

According to the report, the purchase, travel, and fleet charge card programs are at moderate risk for fraudulent and wasteful charges. Although DHS did establish internal controls for the program, the components did not always follow their own procedures and in some cases did not have procedures in place to supplement those developed by DHS.

The watchdog highlighted that the Department needs to strengthen its post payment audit process to ensure that employees are following the guidelines for charge card spending.

In fiscal year 2013, the Department’s total chard card program spending was over $1.2 billion, less than almost $1.4 billion spent in 2012. However, with the inspector general’s risk assessment categorized as “moderate” it is possible that some of that spending went toward fraudulent and wasteful purchases.