The Government Accountability Office will examine more than $39 million in purchases on government credit cards in the aftermath of Hurricane Katrina for signs of abuse or overpayment.
According to federal records, much of the merchandise bought in the days after the storm was bought at retail prices, or was for name-brand products. Officials from the Department of Homeland Security have said that those initial purchases were about saving lives, not haggling over cost.
Congressional audits -- the first due in early 2006 -- will for the first time examine not only abuses of the cards, but also missed opportunities to get discounted rates for basic supplies. The GAO has said that based on previous audits, at least 10 percent of the Katrina charges, about $4 million, might have been saved.
Also, government auditors have said that some anomalies have already been discovered and attributed to poor accounting procedures that didn't properly classify purchases.
Separately, nearly 50 people have been indicted in connection with a scheme that bilked hundreds of thousands of dollars from a Red Cross program to put cash into the hands of Hurricane Katrina victims, according to federal authorities. Seventeen of the accused worked at the Red Cross claim center in Bakersfield, Calif., which handled calls from storm victims across the country and authorized cash payments to them. The others were the workers' relatives and friends.
The scam came to light when Red Cross officials noticed that a suspiciously high number of people were picking up Red Cross money at Western Union outlets near the Bakersfield center, though few evacuees were in the area. Before winding up the program two weeks ago, the Red Cross gave out $1.3 billion to evacuees in more than 1.4 million households.Among those indicted, six people have already pleaded guilty. Red Cross officials have emphasized that no Red Cross workers have been accused in the fraud (the accused workers were employed as part of an outsourced contract to keep up with demand in the wake of the tragedy) and that the amount stolen was a tiny fraction of their cash program. They plan to seek restitution.
Register or login for access to this item and much more
All Accounting Today content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access