Managing Your Procurement Cards

Procurement cards are a great tool to expedite the purchasing process for public agencies.  However, the use of these government issued credit cards also must be managed carefully to prevent misuse, fraud, and non-compliance with public agency policies.

Audit Finding:  In Washington State, the State Auditor's Office recently took the Edmonds School District No. 15 to task with an audit finding for the District's failure to enforce their existing policies.  In  fiscal year 2010, the District spent almost $3.5 million with the procurement cards.  The audit found that the District did not monitor its own policies or notify users when their use of the cards violated the District's policies.  The violations included the following:

• Split Purchases:  The District has a single purchase threshold of $2,500, but did not monitor purchases totaling $8,990 that appear to have been an attempt to circumvent the single purchase threshold.

• Reconciliation:  The audit noted "four instances when original receipts and a signed reconciliation report were not provided to the purchasing department by the 15th of the month."

• Documentation:  Two purchases "lacked itemized receipts for meals purchased while the cardholder was in travel status which does not comply with state law (RCW 42.24.115) or District policy."

Practical Tips:

1. Have policies and procedures in place for the use of procurement cards.
2. Do not permit purchases to be split to be less than the single transaction threshold
3. Follow enforce the policies and procedures 
4. Hold supervisors accountable for carefully reviewing purchases made by their employees.

Mike Purdy's Public Contracting Blog 

© 2011 by Michael E. Purdy Associates, LLC 

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