Treasury
Inspector General for Tax Administration
Office of Audit
ALTHOUGH CITIBANK TRAVEL REBATES HAVE SIGNIFICANTLY
INCREASED, THEY WERE NOT PROPERLY ALLOCATED, RESULTING IN THE MISAPPROPRIATION
OF FUNDS
Issued on September 24, 2010
Highlights
Highlights
of Report Number: 2010-10-124 to the Internal Revenue Service Deputy
Commissioner for Operations Support.
IMPACT ON TAXPAYERS
The Internal
Revenue Service (IRS) receives travel card rebate payments from its credit card
services contractor (Citibank) based on the total dollar volume of its travel
expenditures and the timeliness of payments.
Rebates are required by law to be returned to the IRS appropriation
account(s) from which travel expenditures were originally charged. The Agency-Wide Shared Services function
retained the majority of the approximately $3.2 million in rebates
received during our audit period, instead of properly allocating them back to
all five IRS appropriation accounts.
This resulted in a misappropriation of funds. Ensuring rebates are distributed back to the
correct budget appropriation accounts would enable the IRS to use the rebates
to help fund operations IRS-wide, including providing services to taxpayers.
WHY TIGTA DID THE AUDIT
This review was conducted as part of the
TIGTA Fiscal Year 2010 Annual Audit Plan and addresses the major
management challenge of Erroneous and Improper Payments and Credits. The overall objective was to determine
whether the IRS has effective internal controls to ensure that Citibank travel
card rebates are maximized, accurate, and properly allocated.
WHAT TIGTA FOUND
The
IRS travel card rebate program lacks sufficient management oversight, and the
IRS did not ensure travel rebates were maximized, accurate, and properly
allocated. As a result, the method the
IRS used to distribute the quarterly travel rebates caused a misappropriation
of funds to occur. However, TIGTA did not identify any instances
in which these funds were used for personal use or find any evidence of criminal
wrongdoing.
In
addition, there is no assurance that the rebate amounts the IRS receives are
accurate. Citibank does not provide any
data that would allow the IRS to recalculate and verify the accuracy of the
rebates. Also, travel claims were not
always timely filed and approved, which reduced rebate amounts.
However, the IRS has made much
progress in maximizing the amount of rebates through the new Citibank contract
and improved controls over the travel card program affecting rebates. The new Citibank contract provides a new type
of rebate that has significantly increased the amount of rebates received.
Although rebates have increased, prompt
action is needed to correct the allocation of rebates and obtain validation of
rebate amounts. In addition, increased
emphasis is needed to fully maximize the amount of rebates received and to
further strengthen controls over the travel card program affecting rebates.
WHAT TIGTA RECOMMENDED
TIGTA recommended
that the IRS establish and implement policies
and procedures and institute an oversight program to ensure that all future
travel card rebate allocations are properly distributed and that the time period
allowed for approving a travel claim is clarified. In addition, the IRS should seek assistance from
the Department of the Treasury to obtain the necessary Citibank
data to validate the rebate amounts it receives.
The
IRS agreed with all of our recommendations. The IRS has developed procedures to properly
allocate rebates and plans to institute an oversight program. However, the IRS disagreed with the use of
the term “misappropriation of funds” used in this report and thought the term
“misallocation of funds” was a more accurate description of its noncompliance
with applicable laws and regulations.
READ THE FULL
REPORT
To view the report,
including the scope, methodology, and full IRS response, go to:
http://www.treas.gov/tigta/auditreports/2010reports/201010124fr.html
Email Address: inquiries@tigta.treas.gov
Phone
Number: 202-622-6500
Web Site: http://www.tigta.gov