1. Federal Acquisition Service U.S. General Services Administration Effective Oversight of Your GSA SmartPay® 2 Program (Intermediate) Phillip Myers Elizabeth Skolnik GSA Training Conference & Expo May 4-6, 2010 Phillip Myers Elizabeth Skolnik GSA Training Conference & Expo May 4-6, 2010

2. Federal Acquisition Service 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 2

3. Federal Acquisition Service 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 3

4. Federal Acquisition Service 4 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

5. Federal Acquisition Service 5 Preventing Waste, Fraud and Abuse

6. Federal Acquisition Service 6 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

7. Federal Acquisition Service 7 GAO Recommendations GSA 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

8. Federal Acquisition Service 8 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

9. Federal Acquisition Service 9 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

10. Federal Acquisition Service 10 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

11. Federal Acquisition Service 11 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

12. Federal Acquisition Service 12 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.

13. Federal Acquisition Service 13 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”

14. Federal Acquisition Service 14 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)

15. Federal Acquisition Service 15 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.

16. Federal Acquisition Service Program Oversight - Roles & Responsibilities

17. Federal Acquisition Service 17 Addressing Misuse/Abuse and Fraud What 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.)

18. Federal Acquisition Service 18 Roles & Responsibilities of A/OPCs A/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

19. Federal Acquisition Service 19 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

20. Federal Acquisition Service 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 20

21. Federal Acquisition Service 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 21

22. Federal Acquisition Service Risk Management Controls A/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 22

23. Federal Acquisition Service Charge Card Management Oversight

24. Federal Acquisition Service 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 24

25. Federal Acquisition Service 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 25

26. Federal Acquisition Service 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

27. Federal Acquisition Service 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

28. Federal Acquisition Service 28 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

29. Federal Acquisition Service 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

30. Federal Acquisition Service Resources & Contacts

31. Federal Acquisition Service 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

32. Federal Acquisition Service 32 Questions Please provide your feedback and thoughts about the current and future program at: www.gsa.gov/gsasmartpay under “GSA SmartPay® Program Feedback Form” Contact Us Phillip Myers, phillip.myers@gsa.gov Elizabeth Skolnik, elizabeth.skolnik@gsa.gov GSA SmartPay® Program Support Phone: (703) 605-2808 E-mail: gsa_smartpay@gsa.gov www.gsa.gov/gsasmartpay

33. Federal Acquisition Service Thank you!