This document is an HTML formatted version of a printed document. The printed document may contain agency comments, charts, photographs, appendices, footnotes and page numbers which may not be reproduced in this electronic version. If you require a printed version of this document contact the United States Securities and Exchange Commission, Office of Inspector General, Mail Stop 11-7, 450 Fifth Street N.W., Washington, D.C. 20549 or call (202) 942-4460.
Audit No. 281, Issued June 5, 1998
The Office of Inspector General reviewed the Securities and Exchange Commission’s internal controls over travel upgrades. We examined applicable Commission policies and a judgment sample of 47 upgrades processed during the period from October 1, 1997 to March 31, 1998. For the items tested, internal controls were generally functioning as intended and upgrades were for the most part processed in accordance with applicable policies. We also found that the Commission’s policies complied with the Federal Travel Regulations (FTR) and the recommendations of the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs (Subcommittee) of the House Committee on Government Reform and Oversight.
We are recommending several enhancements to the controls over upgrades and other travel expenditures. The Office of the Comptroller should ensure that its staff reviews lodging requests in accordance with Commission criteria. In addition, it should also consult with the Office of Information Technology about a travel web site on the Commission’s Intranet and remind travelers that use of a rental car must be approved in advance on the travel authorization.
SCOPE AND OBJECTIVES
Our objective was to determine if internal controls over travel upgrades were functioning as intended and if upgrades were being processed in accordance with applicable Commission policies. We also sought to determine if these policies were in compliance with the Federal Travel Regulations (FTR) and the recommendations of the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs of the House Committee on Government Reform and Oversight.
During the audit, we compared the Commission’s travel upgrade guidance to the FTR and the Subcommittee’s recommendations. We interviewed staff from the Office of the Comptroller and examined 47 upgrades processed between October 1, 1997 and March 31, 1998. We also reviewed a judgment sample of 35 travel vouchers with likely travel upgrades.
The audit was performed in accordance with generally accepted government auditing standards during April and May 1998.
From March 1996 through April 1997, the Subcommittee on National Economic Growth, Natural Resources, and Regulatory Affairs (Subcommittee) of the House Committee on Government Reform and Oversight examined the official travel policies and procedures of the Commission. Based upon its examination, the Subcommittee recommended that the Commission restrict travel upgrades to exceptional circumstances, as defined in the FTR.
On February 2, 1998, the Comptroller’s Office reissued guidance on the process for requesting travel upgrades, as well as the criteria for approval. Under the guidance, travelers must complete a form justifying the request. The form is reviewed by an authorizing official, who forwards it to the Comptroller for final approval.
Upgrades may either be for transportation (first class or business class rather than coach) or lodging (actual expenses rather than the standard per diem amount). The Comptroller will permit first or business class travel only due to a qualifying medical necessity or in other narrow circumstances expressly provided in the FTR. It will not approve travel upgrades based on the necessity to review confidential documents or perform agency work.
The Comptroller will approve lodging upgrades in unusual circumstances such as when a Commission official travel management center (TMC) has confirmed that lodging is not available within the prescribed per diem rate. Alternatively, the traveler must identify the number of attempts to find accommodations within the prescribed per diem rate. To the maximum extent possible, travelers are to make all official travel arrangements for transportation, lodging, and rental vehicles through the TMC.
The Subcommittee requested that the Office of Inspector General conduct periodic audits of the Commission’s travel practices, including upgrades, to evaluate compliance with applicable policies and procedures. In response, the Office conducted this audit and an audit of the Commissioners’ travel (Audit Report No. 280).
We found that, for the items tested, internal controls were generally functioning as intended and upgrades were processed, for the most part, in accordance with applicable policies and procedures. The audit also found that the Commission’s applicable travel upgrade policies complied with the Federal Travel Regulations and the recommendations of the Subcommittee.
Our detailed findings and recommendations to enhance controls over upgrades and other travel expenditures are discussed below.
Transportation upgrade PROCESSING
Using a listing of upgrade requests provided by the Comptroller’s Office, we determined that 17 transportation upgrade requests were processed between October 1, 1997 and March 31, 1998. The Comptroller’s Office approved all of the requests, three of which were for first class travel and 14 for business class.
We reviewed all 17 requests and found that they were processed in compliance with Commission policies and procedures. Also, the requests met the criteria for approval in the FTR. For the first class travel requests, the traveler had a medical condition, while the business class requests were for trips of more than 14 hours.
lodging upgrade PROCESSING
The Comptroller’s listing of upgrade requests and a judgment sample of 35 vouchers, which appeared likely to contain upgrades, were used to identify lodging upgrade requests. We did not rely solely upon the Comptroller’s listing because we sought to identify any upgrades which did not follow the normal approval process.
We reviewed a total of 30 lodging upgrade requests, 20 from the listing and 10 from the judgment sample of vouchers. We found that most requests were processed in compliance with Commission policies and procedures and the FTR approval criteria.
As stated in the Background, the Comptroller will approve lodging upgrades when a travel management center has confirmed that lodging is not available within the prescribed per diem rate. Alternatively, the traveler must detail the attempts made to find accommodations within the prescribed per diem rate.
We found three instances where this criteria was not applied correctly. Two requests for lodging upgrades were approved, even though the travelers did not use the TMC and did not identify the attempts made to procure lodging within the per diem rate. On the other hand, one upgrade request was denied for failure to use the TMC, even though the traveler had listed the three hotels contacted while attempting to find lodging.
The Office of the Comptroller should ensure that its staff reviews lodging requests in accordance with Commission criteria. For example, it could provide internal guidance to its staff (covering such issues as how many hotels travelers are expected to call, and whether upgrades should be approved for conferences held at hotels). It could also provide additional training and perform spot checks of the actions taken on upgrades.
travel web site
The General Services Administration (GSA) has established an Internet web site known as the GSA Value Lodging Program. The purpose of the site is to provide travelers with information on safe and convenient hotels. The site lists hotels having rates within the per diem allowance at various locations.
A travel site on the Commission’s Intranet could provide staff with information on hotels and include general information on upgrades and other travel issues.
The Office of the Comptroller should consider establishing a travel site on the Commission’s Intranet site. The site should have links to GSA’s Value Lodging Program and other relevant Internet sites.
The Office of the Comptroller (OC) indicated that it has been investigating this option in recent months and is considering using a contractor to establish an OC home page.
Rental vehicle authorization
Commission travel guidance requires that rental vehicles be specifically authorized on the travel authorization. We found two vouchers in which reimbursement of rental vehicle expenses was sought, but had not been authorized on the related travel authorization.
The Office of the Comptroller should remind travelers that use of rental vehicles must be authorized in advance.