City Auditor Matthew Grady has completed his independent examination of the City’s purchasing card program and published his findings for public review.
The audit focused on purchasing card (p-card) activities in fiscal years 2012 through 2016 to determine whether policies are in keeping with accounting standards and if internal controls are sufficient to deter and detect abuse. He concluded that p-cards pose an inherent risk for abuse and that the City must strengthen its internal controls to minimize that risk.
P-cards are used for the purchase of goods and services which are critical to accomplishing the City’s mission.
In June, City Manager Ron Olson directed reduction of p-cards organizationally by half. The number of P-cards was reduced again this month bringing the current total to 70.
“I recognized right away that the number of purchasing cards in our organization created the potential for abuse,” said Olson. “It is my goal to eliminate that potential to the extent possible so that we can protect the City’s resources and instill public confidence in our financial management system.”
The purchasing of goods and services is critical to accomplishing the City’s mission. P-cards are used for this purpose, however, a centralized purchasing system offers
The audit made specific recommendations, all of which the City Manager agrees with and plans to implement by the end of the year. They included revising the p-card policy manual, developing tracking and notification systems for usage and violations and providing card suspension authority.
Grady’s findings identified one case of habitual p-card misuse by an employee that was reported and investigated in 2015. He also noted a limited number of purchases for items such as meals for office meetings, coffee supplies and holiday parties that were not in keeping with public sector best practices.
“The audit findings echoed those of the recent management audit in terms of the need for a strong system of checks and balances,” said Grady. “None of the incidents of abuse identified were high dollar, but any dollar not spent appropriately is too many.”
Grady says a strong control system will include limiting the number of p-cards and transactions, supervisory preauthorization for expenditures, separation of duties for making and approving purchases and frequent review of billing statements. He says training is another key component that will improve users’ understanding and compliance with policy.
The entire Purchasing Card Program Audit is available online at killeentexas.gov/auditor.