For purchases over $2,500 [by federal employees], nearly half ”” or 48% ”” were unauthorized or improperly received.
For purchases over $2,500 [by federal employees], nearly half ”” or 48% ”” were unauthorized or improperly received.
This appears to be a very bad financial system design. My husband has a corporate charge card. It’s in his name, and he has to pay it monthly from personal funds. Thus, when he charges business expenses, he has a strong incentive to file the expense report and be reimbursed, since American Express is not interested in his excuses; it insists on payment. The expense reports have to be signed by a superior and are reviewed by an independent office in the company. Further, the Amex statements come to our personal address, which means I see them and pay them. He not only can’t get anything past the company, he’s got me to deal with! As far as I know, this design is standard business practice. The government needs to implement sound accounting and control procedures.
along this vein:
Special license plates shield officials from traffic tickets:
http://www.ocregister.com/articles/dmv-police-confidential-2011354-program-records
and politicians wonder why the public is cynical??
I should addd I hear that we are in an increasingly divirgent society that is not along race or socio economic lines, it’s along those who work for the state and those who don’t. There are more more millionaires in the DC area than anywhere wlese thanks to the huge number of exorbitantly paid government workers (I will try to find that story).
There used to be auditors. Unfortunately, when we decided to trim big, bad, government, we decided to get rid of auditors. Thus, ironically, making government more expensive.
I’m all for smaller government. But I’m more for smarter government. We’ve not seen much smart government for the last 8 years. Because they generally didn’t believe in government at all.
John, I think you left three zeros off your number of years. There are occasional bright spots, but records of government inefficiency and stupidity more or less start with the invention of writing, which was itself largely invented to keep tabs of how much the government could skim off the productive part of Mesopatamian society.
The overwhelming majority of federal officers and employees have government credit cards of the type described by Katherine [#1]. You receive a bank credit card in your own name. The bank sends you a monthly bill, which you are legally obligated to pay. You then seek reimbursement from the government.
The abuses here involve “purchase cards,” a very different kind of card in which the bill goes directly to the government. Designated employees can use purchase cards to buy things such as departmental office supplies, which you cannot reasonably expect one employee to pay for from his or her own pocket.
Looks like managers have been guilty of a colossal failure to oversee how employees with purchase cards are actually using them. The government should move immediately to recoup the cost of personal items improperly bought with purchase cards. (For starters, the article mentions lingerie.) It should also bring criminal charges against the worst offenders. The upshot will be a lesson that will inhibit purchase-card abuse for many years to come.
John, “small government” has precisely zero to do with the number of auditors employed by same.
Andrew [#5]: As the Abramoff affair illustrates, some of the most cynical critics of government have the least compunction about milking and bilking it for their own gain.
Don’t scandals of thsi sort surface every five to ten years or so? I remember when I was in high school (early to mid 90s) reading about some gov’t official taking out a gov’t credit card of this sort and using it for thousands at a strip club, and my parents talking about how it was nothing new.
Jeffersonian [#7]: Not exactly. Remember how the Reagan Administration reduced the number of bank examiners at the same time as it was (unbeknownst to itself) letting the savings and loan industry go haywire?
If you don’t really care how government works, auditors are expendable.
Did I say anything contrary to that, Irenaeus? I merely pointed out that government has been corrupt for as long as we have records.
#10, you are confusing regulators with internal auditors.
First thought: Sounds bad.
Second thought: While some of the expenses are ridiculous, and the embezzlers involved should be invited to a long, LONG visit in a zero-star federal hotel (of the kind with barbed wire atop the fences), I see the detail that many of the expenditures that go to make up the figures are called, simply, “unauthorized”. It’d be worth breaking the “unauthorized” down into categories of “basically legitimate expenses that just didn’t go through all the proper dance steps for authorization,” on the one hand, and “shouldn’t have spent government money on this,” on the other. Having seen bureaucracy at work, I’m familiar with the dynamic of authorization requirements that are broadly ignored due to the administrative burden of the red tape involved. If someone used a card to fill up the tank of a vehicle being used in government service, but forgot to fill out the form, it may be a problem, but it’s not appalling. The $100+ dinners with cognac are another thing altogether.
Third thought:
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Jeffersonian [#12]: I’m well aware of the distinction between bank examiners and internal government auditors, but in this context it hardly matters. If you don’t really care how government works, government employees with green eyeshades are expendable and their titles don’t much matter.
Consider, moreover, the context in which the Reagan Administration cut the number of bank examiners assigned to scrutinize thrift institutions’ financial condition and managerial competence. Most thrift institutions were market-value insolvent: their assets were worth less than their liabilities. They could remain open only because they had federal deposit insurance. The government had, in effect, taken on virtually all the thrift industry’s liabilities. If thrifts took big risks and won, their shareholders would get the profits; if thrifts gambled and lost, the government would bear the loss.
Under the circumstances, thrift institutions’ managers had a more problematic and perverse set of incentives than any government employee. Given those incentives, insolvent or near-insolvent thrifts were more dangerous in private hands than they would have been under direct government control. The government needed to monitor them closely. It didn’t.
I really doubt that this present scandal has much to do with it being the Bush administration vs. some other administration. Businesses have cost centers. Items bought on a purchase card like this appear on the performance reports of the cost center, for which the manager is responsible. There is an incentive to scrutinize these purchases, and the pressure to keep costs down probably prevents massive fraud in many cases. Actually, probably most large companies wouldn’t have purchase cards. They’d have open purchase orders and accounts with office supply houses, and the billing would go into accounts payable for verification and authorization checks.
#14, with all due respect, that is simply specious. To insist that government must be kept small is not to say one is insouciant about its internal workings. To the contrary, a belief in small government implies a distrust of same and thus an even greater belief that a close eye must be kept on it, for example, by way of internal auditing.
Restraining the scope of government go hand in hand with monitoring the same.
Irenaeus, I’d certainly rather see government funds expended on bank examiners and basic transportation supervision than on the welter of discretionary grants and programs we have. Why is Congress so prone to bribery scandals? — Because they’ve got so much money to throw around. No earmarks, and every expenditure program voted on specifically, I say. Of course this won’t happen. It’s such a monster I’m not sure that reform is possible.
I do think reforms in government accounting systems and budgeting would help.
Government auditors are one of the least cost-efficient agencies of government. They find a few tabloid-making examples of spectacular extravagance and slam the entire government for offences that amount to improperly filling out useless paperwork and ignoring foolish bureaucratic obstacle courses. The motive of the auditing agencies is to make headlines and intimidate legislators so that they will not fence in ever-bigger government auditing empires.
All things considered more money would be saved by eliminating the auditing agencies than by paying attention to their recommendations.
And this is the same government that the Democrats want to run our healthcare payment system.
So long as we have government officials who are human beings, we will have government corruption. The problem is that we don’t do enough to stop the corruption. The Civil Service systems was put in place to stop corruption and has been a major cause of it. Have you ever tried to fire a Civil Service employee? Managers, being human, usually take the path of least resistance by transferring the employee to another department.
So, what do we do about it? First, we reduce the scope of government because that reduces the number of people who can be corrupt and the total amount of corruption. Second, we realize that government corruption is going to happen and we put controls in place to stop it. Personal use of goods purchased with government money is punishable by a reimbursment and a 50% fine for the first offense, being fired and going to jail for the second offense.
That should be enough to start with.
YBIC,
Phil Snyder
I traveled for the state over a 5 year period, and had an American Express card to use for that purpose. We weren’t supposed to shop with it (unless the airline lost your luggage) or otherwise buy questionable things, but that was really so it didn’t look bad in the newspaper. Like Katherine’s husband, I paid the bill and then got reimbursed for travel-related expenses. Closthes – whether the airline lost your luggage or not, wouldn’t be paid for. If I did the paperwork right, stood on one foot, barked like a dog, and no one at the accounting office screwed up, I got the money in time to pay Amex. Actually, when we were all out in the field having dinner together, a favorite pasttime was to cuss Amex. But never mind that…
My point is that credit card purchases should be the responsibility of the person making the charge, reimbursible upon submitting receipts. Why would it be any different?
“Why is Congress so prone to bribery scandals? Because they’ve got so much money to throw around” —Katherine [#17]
Katherine: I share your opposition to congressional earmarks and your skepticism about having a welter of grant programs. But campaign finance plays a more fundamental role in congressional bribery scandals.
Members of Congress need to raise campaign contributions every month, every week, almost every day. There is a fine line between legal campaign contributions and bribery. Any quid pro quo (“If you contribute to my campaign, I’ll try to get the amendment you want”) turns an otherwise-legal contribution into a bribe. That’s clear enough in principle. But most quid pro quos are implicit: not spelled out, yet well understood by both sides.
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“To the contrary, a belief in small government implies a distrust of same and thus an even greater belief that a close eye must be kept on it, for example, by way of internal auditing. Restraining the scope of government go hand in hand with monitoring the same” —Jeffersonian [#16]
Perhaps you haven’t heard of Grover Norquist, Tom DeLay, Robert Ney, Richard Pombo, Michael Scanlon, and Ralph Reed.
Norquist heads an anti-tax organization is perhaps best known for declaring, “I don’t want to abolish government. I simply want to reduce it to the size where I can drag it into the bathroom and drown it in the bathtub.” This same Norquist laundered money for Abramoff’s schemes.
Norquist well illustrates how anti-government ideology can help individuals rationalize shady practices and their own greedy feeding at the public trough: if government is bad, why not get in on the action? Most individuals subscribing to anti-government ideology don’t do this themselves but their D.C. darlings do much more of it than they realize.
As do your DC darlings Irenaeus. Both sides are full of crooks. Don’t kid yourself. Yours have just been out of power till recently is all.
And if Congress weren’t handing out money right and left, there wouldn’t be much incentive for the campaign quid pro quo. Members of Congress in both parties are human and therefore sinners, and the temptation is enormous.
I’ll be voting for McCain in November in the hopes that he will actually veto some spending bills. “Pork” has been one of his signature issues, one I agree with (unlike some of his others), and so there is some hope, although no certainty, that he’ll actually do something about it.
I have a company purchasing card that is paid directly by the company. This is a simple thing to fix. Make the supervisor approve the employee’s monthly purchasing log, which has to be reconciled to the CC statement. In the event of fraud, both the employee and supervisor are liable for discipline, including termination of employment and financial restitution. The monthly reconciliation report is also submitted to an third party for audit. Works for our company.