If you've ever filled out a business expense report, you know just how flawless your corporate finance department expects such paperwork to be. This is for good reason, as government regulations — specifically the IRS — require proper documentation.

Shouldn't the government be held to the same standards?

Over the past several years, the Government Accountability Office (GAO) has issued numerous reports and testimonies on internal control breakdowns in certain individual agencies' purchase card programs. After reports of credit-card abuse at some federal departments, the GAO examined spending controls across the federal government in 2005 and 2006 and published its latest findings earlier this year.

"Overall, the results of this audit show that the government-wide failure rate is unacceptably high," the report states.

The review of more than a dozen departments between July 2005 and September 2006 found that 41 percent of nearly $14 billion in credit card transactions — whether legitimate or questionable — failed to follow proper reimbursement procedure. Moreover, for purchases that were over $2,500, 48 percent were improperly received.

"We also found that agencies could not provide evidence showing that they had possession of, or could otherwise account for, 458 of 1,058 accountable and pilferable items," the report reads. "The missing items were valued at over $1.8 million, out of over $2.7 million tested."

In other words, in a sample of purchases worth $2.7 million, the government could not account for more than $1.8 million of it. For instance, the Army could not account for $1.5 million worth of 16 server configurations containing 256 items that it purchased.

These findings are bad enough, but some of the misuses discovered are downright ridiculous, borderline absurd.

Among the for-personal-use abuse of government credit cards discovered: iPods, gambling, tailor-made suits, lingerie, a $13,500 steak-and-liquor dinner and even Internet dating sites.

Seriously.

Here is a shortlist of purchases that probably should have raised an eye or two a bit sooner:

• At the National Aeronautics and Space Administration (NASA), one cardholder used the government purchase card to buy two 60GB iPods. NASA officials maintained that the iPods, which were requested by a supervisor, were essential for storing official NASA information. Yet when the devices — engraved with the supervisor's name and NASA center — were confiscated, they were found to be storing personal photos, songs and music videos.

• Over a six-year period, a cardholder at the Dept. of Agriculture paid more than $642,000 to a live-in boyfriend who shared the same bank account as the cardholder. The 180 convenience checks were used for gambling, car loan and mortgage payments, and other retail purchases. The activities went undetected by the agency until a whistleblower reported the cardholder.

• At the Dept. of Defense, four cardholders purchased $77,000 worth of clothing and accessories, including expensive clothing totaling more than $45,000 from vendors such as Brooks Brothers and Johnston Murphy. The cost of suits and accessories from Brooks Brothers alone totaled $2,300 per individual. The four cardholders also purchased more than $32,000 at other clothing and "outfitting" establishments.

• Cardholders at the U.S. Postal Service (USPS) paid more than $13,500 for 81 conference attendees, at more than $160 per person, to dine at a restaurant in Florida. The dinner included steaks, crab, appetizers and more than $3,000 in alcoholic beverages (Courvoisier, Belvedere, Johnny Walker Gold and 40+ bottles of wine costing $50+ each) purchased over a five-hour period.

• A cardholder at the Dept. of State purchased $360 worth of women's underwear/lingerie at a place called Seduccion Boutique. When asked to justify the charge, the cardholder claimed the transaction was to go toward "jungle training by trainees of a drug enforcement program in Ecuador." (The report does not specify whether the lingerie was camouflage.)

• In addition to accessing porn Web sites on a government computer, a postmaster at the USPS charged $1,100 on his government purchase card to subscribe to two Internet dating services over 15 consecutive months. During this period, the Internet dating charges were the only purchases made on the card. Each of these charges was authorized and paid for by the USPS, and went undetected by the agency for over a year.

"Because every federal dollar that is spent on fraudulent, improper and abusive purchases is a dollar that cannot be used for necessary government goods and services, ensuring that purchase cards are used responsibly is of particular concern at a time when the United States is experiencing substantial fiscal challenges," the GAO says in its latest audit report.

The report calls for the General Services Administration (GSA) and Office of Management and Budget (OMB), both of which help administer the credit-card program, to improve accounting, particularly for electronic equipment that could be easily stolen. The OMB agreed to the GAO's 13 recommendation, and the GSA partially agreed.

Resources

Governmentwide Purchase Cards: Actions Needed to Strengthen Internal Controls to Reduce Fraudulent, Improper and Abusive Purchases
by Carl Levin and Norm Coleman
United States Government Accountability Office, March 2008