Wednesday, June 12, 2013

Monitoring for Purchasing Card Abuse and Fraud

Purchasing cards (also known as procurement cards or P-cards) can be an effective tool for streamlining and decentralizing some purchases, especially in an era of decreased resources.

There are, however, both internal and external risks to purchasing card programs.

Internal risks:  Purchasing card programs should be carefully monitored to ensure that employees are using the cards appropriately:
  • Legitimate agency needs:  Are the charges legitimate purchases for the agency's business needs?
  • No personal use:  Are there controls in place to ensure that the cards are not used by employees to buy goods and services for their personal use?
  • Competition:  Are employees obtaining competitive prices for goods and services purchased with the cards?
  • Dollar thresholds:  Are employees staying within authorized dollar amounts for each transaction and on a per day basis?
  • Loaning of cards:  Are there controls in place to prevent employees from loaning their card to other employees to make purchases?
External risks:   In addition, there are external risks to purchasing cards that include the following:
  • Reporting lost cards:  Do employees with cards know the process for reporting stolen or lost cards?
  • Reviewing transactions for fraud:  Do employees regularly review all transactions for potential fraudulent purchases?  A public agency in Washington recently discovered that someone outside of government had hacked into a purchasing card account, using the card number to make several purchases.
Mike Purdy's Public Contracting Blog 
© 2013 by Michael E. Purdy Associates, LLC

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