Defence Department staff billed taxpayers more than $3.3 million for events at private golf courses, sports memberships and entertainment over three years, a damning audit report says.
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The audit revealed foreign personnel also used the department's credit cards to spend almost $1 million, prompting management to seek advice on how to tighten restrictions.
More than 1200 taxi trips between 1am and 4am were billed to taxpayers over three years, with the Auditor-General noting that little work-related travel was expected during these hours. These trips did not include airport-related travel.
Defence workers also used more than $35,000 of taxpayer money to pay for traffic fines in the audited period.
When a Defence employee sped through a school zone in Western Sydney, the $278 fine was paid on a government credit card. The driver's unit was issued with a $1258 fine for failing to nominate the person responsible, but that, too, was charged to the public.
Credit card limits range from $500 to a staggering $2 million. Three cards had a $1 million limit; another 107 cards were capped at $250,000. Last year, 125 Defence employees had collective access to $13 million of taxpayers' money.
The department also botched an attempt to block purchases related to clubs, country clubs, sporting memberships and entertainment. The error allowed Defence staff to spend more than $3.3 million on these items, although the department insists no country club transactions have been identified.
The audit found that 35 per cent of transactions were approved by someone working in a more junior role than the cardholder, which was inconsistent with information supplied to senators during estimates.
Credit cards were used most often during May and June. The audit warned that parts of the workforce were trying to spend their allocated budgets before the end of financial year, to ensure similar funds were granted in future years.
"This is a matter which would warrant close examination by defence management, as such practices risk inefficient or unnecessary spending on items of marginal value," the audit report said. "Defence has indicated that it will be undertaking a detailed review."
The department also admitted staff were previously able to increase their own cash limits without approval from their financial officers or supervisors. This was changed earlier this year.
In January, the department also introduced new credit card blocks on gambling, dating or escort services. An extra 50 merchant categories will now be monitored for inappropriate charges.
The audit found the department did not have "complete control" of its credit cards and senior leaders needed to end the misuse. Defence accepted all recommendations.
The department is responsible for about 41 per cent of all Commonwealth travel card spending. Defence was also responsible for 97 per cent of all cash advances by Commonwealth entities during 2014-15.
In a response to the audit, the department said significant progress had been made to improve its management of credit cards.
"The chief finance officer has already revised the Department of Defence credit card governance arrangements to address issues identified by the ANAO, as well as implementing a suite of investigative analytics covering all aspects of credit cards within Defence," the department said.
But the audit was critical of many attempts to tighten restrictions around credit card use and monitoring.
"Defence has implemented a range of detective controls, including cardholder verification, independent reviews and spot checks, but their effectiveness is undermined by a lack of rigour in the independent monthly review process," the audit said.
