March 13, 2017

Actions Taken by Western Area Power Administration to Address Internal Review Findings on its Desert Southwest Region’s Use of Government Purchase Cards

Western Area Power Administration’s (Western) Desert Southwest Region (Desert Southwest) operates and maintains more than 40 substations and 3,100 miles of transmission lines. Desert Southwest uses Government Purchase Cards (GPC) to make small purchases, not to exceed $3,500, to support its mission and daily operations.

In December 2014, Western’s Office of Internal Audit and Compliance (Internal Audit) and Office of Procurement issued an internal review report on “Internal Control Weaknesses in the Desert Southwest Region’s Purchase Card Program.” The report found that weaknesses in the overall control environment contributed to potentially fraudulent or improper transactions, including almost 2,500 transactions by 74 cardholders, totaling approximately $1.9 million, requiring further review by region officials.  Due to the seriousness of the issues identified in the internal review report, we initiated a review to determine the status of corrective actions taken by Western and its Desert Southwest Region in response to the report. Our review was limited to identifying the actions taken to date and did not evaluate the effectiveness of the actions.

We found that Desert Southwest had taken numerous actions to address the issues identified in the internal review. In addition, Western’s Headquarters had taken specific actions to address issues identified with Desert Southwest’s use of GPCs as well as actions to improve the overall Western-wide GPC Program. Because Western’s actions to address GPC concerns were ongoing or recently implemented during the course of our review and Internal Audit planned on conducting a followup review, we did not expand our work to determine the effectiveness of the corrective actions in addressing the identified weaknesses. Given that significant internal control weaknesses were identified in Desert Southwest’s GPC Program as well as across Western’s entire GPC Program, we suggest that the Administrator ensure continued oversight of the GPC Program.

Topic: Management & Administration