September 30, 2024 – Smithsonian Institute Office of Inspector General: Smithsonian Needs to Improve Its Management and Allocation of the Rebates Received from the GSA SmartPay Program
The Smithsonian Institution (the Smithsonian) receives quarterly rebates as part of its participation in the U.S. General Services Administration (GSA) SmartPay program. Rebates are monetary payments to agencies/organizations based on the dollar or “spend” volume during a specified time period that can be used to directly fund and support mission-critical efforts.
For the fiscal years 2017 through 2022, the Smithsonian received nearly $2.7 million in rebate payments. Proper management is critical to ensuring that rebates are returned to the appropriation or account from which they were expended. The Smithsonian uses two funding sources to make purchases: federal funds and trust funds. Rebates returning to federal fund accounts are subject to different statutory and regulatory requirements than rebates returning to trust fund accounts. The Smithsonian’s rebates are remitted as a single quarterly check and do not distinguish the original funding source. For more background information, see Attachment I.
The Smithsonian Office of the Inspector General (OIG) conducted this audit to assess the extent to which the Smithsonian has developed and implemented written policies, procedures, or guidance for rebates received from the GSA SmartPay program and the extent to which these funds are spent in accordance with applicable laws, regulations, and guidance. Our methodology was to review written policies, procedures, and guidance for the rebate payments and determine how the Smithsonian managed rebates. For a detailed description of OIG’s objectives, scope, and methodology, see Attachment II.
Results of the Audit
OIG determined that the Smithsonian did not properly allocate the charge card rebates received back to the appropriate funding sources (federal funds and trust funds) because management did not have adequate rebate allocation policy and procedures to establish a clear methodology and guidance for how to allocate rebates equitably. Instead, management allocated the entirety of the rebates to a federal account and then redistributed all of the rebate money to the central trust account to fund the charge card program’s salaries and expenses. To comply with federal appropriations law, the Smithsonian needs to allocate the refunds to the appropriate funding accounts.
GSA SmartPay program guidance states that “refunds are discounts offered by the banks, which may be deposited to the credit of the appropriation against which the initial cost was charged.”2 This guidance came from the decisions of the U.S. Government Accountability Office (GAO) that defined travel rebates as refunds to obligated appropriations and held that agencies were authorized to retain refunds to appropriations. Specifically, the general appropriations rule is that all funds received for the use of the United States must be deposited into the Treasury’s general fund as miscellaneous receipts. One of the exceptions is that an agency may retain receipts that qualify as refunds to appropriations. Such receipts represent a return of a portion of a prior agency payment and may be deposited to the credit of the appropriations against which the payment was initially charged.3
Furthermore, Appendix B of OMB Circular A-123 states, “Unless specific statutory authority exists allowing refunds to be used for other purposes, refunds must be returned to the appropriation or account from which they were expended, and can be used for any legitimate purchase by the appropriation or account to which they were returned, or as otherwise authorized by statute.”4
In 2012, the Smithsonian’s Office of Planning, Management, and Budget (OPMB) acted on informal advice from an Office of Management and Budget (OMB) representative to “Deposit the whole rebate in the federal account and then transfer it (or make payment) to the trust account to cover those staff costs.” Since 2012, the Smithsonian inconsistently applied this method. In fiscal year 2020, OPMB directed Smithsonian staff to fully implement this process. Proper allocation between federal and trust funds, as required by GSA guidance, GAO decisions, and OMB A-123 guidance, for rebates received since fiscal year 2012 did not occur. This guidance requires that refunds be returned to their respective appropriation or expense accounts. As a result, the rebates received since fiscal year 2012 were not properly allocated between the federal and trust funds as required by GSA guidance, GAO decisions, and OMB A-123 guidance that refunds must be returned to the appropriation or account from which they were expended.
A misallocation of rebates or noncompliance with federal appropriations law can occur without an equitable distribution of rebate money.
Download Right Now Oregon on the Google Play Store
About the Author
