Liability for Purchase Account Transactions and The Review Process

Liability for Purchase Transactions

The GSA SmartPay Master Contract defines liability for purchase transactions:

• Liability for transactions made by authorized account holders rests with the Federal Government.
• If the account is used by an authorized account holder to make an unauthorized purchase, the Government is liable for payment and the agency is responsible for taking appropriate action against the account holder.
• Use of the account by a person other than the account holder, who does not have actual, implied, or apparent authority for such use and for which the account holder receives no benefit, is not the liability of the Federal Government. If it is discovered that someone other than the account holder has used the account, it should be reported immediately to the A/OPC and the bank’s customer service representative.

The Review Process

Because an agency is liable for unauthorized purchases by an authorized account holder, agency purchase policy should address reviews conducted by the Approving Official (AO) and Agency/Organization Program Coordinator (A/OPC) to mitigate agency risk.

Approving Official Review:

The approving official is responsible for ensuring that all purchases made by the account holder were appropriate and the charges accurate.  All questionable purchases must be resolved with the account holder.  In the event an unauthorized purchase is detected, the AO must notify the A/OPC and other appropriate personnel in accordance with agency policy.  After review, the AO will sign the account statement and maintain the documentation in accordance with agency procedures.  Timely reviews of transactions are necessary to ensure detection of possible cases of account misuse and fraud.  The AO should have direct knowledge of the account holder’s role in the agency and the ability to verify receipt of the purchase.

Program Coordinator Review:

Program coordinator reviews of the purchase program must be accomplished to ensure adequate local internal controls are in place.  The review should consist of an evaluation of local operating procedures to ensure that account holders and approving officials are operating within the prescribed policies. A review includes: 

• Compliance with agency policies;
• Applicable training requirements;
• Appropriate delegation of authority;
• Integrity of the purchase process;
• Compliance with procurement regulations;
• Receipt and acceptance procedures; and
• Records retention.