09062011 PROCUMREMENT CARD CONTROLSPCC
ROCUREMENTARDONTROLS
Review of the City Procurement Card Program
September 6, 2011
Procurement Card Program(ProCard)
?
implemented in 2002
Current 409 Active Cards
?
Monthly Purchase Limit Generally $5,000
?
Single Transaction Limit $2,500
Requires Dual approval from Purchasing
?
Agent and Comptroller for card and limit
changes
2
Required signature of director and cardholder
?
PCB
ROARDENEFITS
Eliminates costly cash travel advances
?
Reduces administrative costs and time for
?
purchase to payment process
Allows the City to utilize e-vendor and on-line
?
purchasing options
Provides alternative payment solution for
?
business continuity during disaster or other
emergency situations
Improves employee productivity and
?
streamlines employee processes
Some discounts
?
Increases data captured/spending analytics
?
3
PCC
ROARDHALLENGES
Almost full time FTE in Finance to administer
?
this program between two divisions.
Many administrative and procedural
?
requirements for cardholders, supervisors,
and department managers are designed to
detect and prevent fraud, but require
attention to detail and duplicate reviews.
4
C-WA-FC–AP
ITYIDENTIRAUDONTROLSLLROGRAMS
City Manager Memorandum on Intentional Misuse of Funds
o
(March 2011) to all Employees
Department Representation Letter –Director’s attestation to
o
control environment within their department
City-wide Administrative Directives providing Policy and
o
Procedural direction
Trainings provided by Finance on Controls, Procedures and
o
Policies
Integrity Connection Hotline managed by the City Auditor
o
Code of Ethics, Internal Control Documents on intranet site for
o
Departments.
Annual external audit
o
5
C-WPDG
ITYIDEOLICIESANDIRECTIVESOVERNING
ASP
PPROPRIATEPENDINGRACTICES
Fraud, Waste and Abuse Prevention and Reporting
o
Administration of Petty Cash and Change Funds
o
Food, Beverage and Refreshment Expense Guidelines
o
Member Allowable Travel and Related Cost Directive
o
Purchasing and Payment Requirements
o
6
FPG
INANCEROCEDURESOVERNING
APPP
PPROPRIATEURCHASINGANDAYMENTRACTICES
Procurement Card Manual
•
Purchasing Manual
•
Travel & Tax Information, FAQS & Restaurant Tax
•
Guidelines
Acct Pay and Disbursement Checklist
•
Internal Controls Introduction, Overview and
•
Recommendations for Improving Controls
Links include:
On-Line Office Supply Contract and City-wide
•
Contracts
Quote Information and Request for Quotation forms
•
7
Woman and Minority Supplier Listing by Commodity
•
PCPA-FC
ROARDROGRAMNTIRAUDONTROLS
Surprise on-site reviews of Card Logs, Bills & Procedures
•
by Finance Purchasing and Comptroller staff.
Monthly online review of bills by Purchasing and
•
Comptroller.
Quarterly Report to Directors and Deputy City Managers of
•
all purchases in their oversight area.
Supervisor and Program Manager review of monthly bills,
•
receipts and log details. Dept. Internal Control Procedures.
ProCardpurchasing transaction and monthly limits. Blocks
•
on certain categories of purchases.
Required Manager and Holder training and re-training.
•
ProCardSharePoint website for policy and procedures.
•
Provider Bank anti-fraud detection program.
•
Office of the City Auditor audits.
•
8
ProCard FY11 Program Statistics
17,314 FY11Transactions down
?
$3,041,845 Expended
?
Finance Purchasing/Comptrollers conducted over 350
?
audits of cardholders
3 Cards Suspended or Revoked
?
14 letters of Reprimand for “Violations”
?
86 Cardholders and Managers Received ProCard
?
Refresher Training at the request of departments
99 Cardholders and Managers at City-wide training
?
57 Cardholders receiving New Cardholder Training
?
$20,000/year in ProCardRebates.
?
$84,094 received in rebates Program To Date
?
9
ProCard Audit by City Auditor
20,267 Transactions Reviewed
?
316 Procedural Exceptions (1.6% of transactions reviewed)
?
63 Policy Exceptions (0.3% of transactions reviewed)
?
$3.64 Million Dollars of Transactions Reviewed
?
$65,093 Associated with Procedural Exceptions (1.8%)
?
$7,153 Associated with Policy Exceptions (0.2%)
?
A majority of exceptions were corrected by departments
?
during the audit process.
Auditor identified a need for additional policy and
?
procedure training.
10
Procedural Issues--Less than 2%
43% Missing Required Details or Receipt
?
included transactions where receipt was credit
card receipt and did not itemize details of meal
purchase.
33% Business Purpose Not fully Explainedwas
?
when the written log did not identify why the
purchase was made. i.e. Chicken feed purchased,
but didn’t identify chicken feed needed for
chickens used in testing for viruses as part of
Mosquito Control.
11
Departmental Response to Audit
Providing a plan for future actions
?
and procedures--more attention to
business purposes and maintaining
detailed transactions.
Continue to review cardholder
?
purchases
Look for opportunities for
?
eliminating cards.
Address other exceptions as noted
?
in responses to audit letters.
12
City Actions -Finance
Finance has implemented an additional level
?
of supervisory review and attestation.
Finance has strengthened controls to ensure
?
expenses paid on ProCardsare not claimed
on Travel Reimbursement Vouchers.
Finance is receiving termination notices to
?
take immediate action on outstanding
ProCardsfor terminated employees.
Finance will continue on-going training,
?
100% annual site visit review, ProCard
Website, and day-to-day support.
Finance is transitioning to the State ProCard
?
Contract which will increase rebates and
ensure a review of all data in the database.
13
Finance will explore new on-line auditing
tools for departments to use.
GC
ENERALONCLUSION
Overall, the City has excellent internal controls
?
in place city-wide and for the ProCardProgram.
Despite significant staff reductions, we have
?
initiated many measures that improve controls
and provides many fraud prevention monitoring
functions.
The Finance Department generally agrees with
?
the recommendations presented by the City
Auditor and will work with the City Auditor to
continue to improve controls.
14