Best Practices in Use of Procurement cards December 9, 2015

TOPICS Background Best Practices – Management level What are Procurement cards? What are the advantages of using procurement cards? What are the disadvantages of using procurement cards? Best Practices – Management level What are management’s responsibilities? Best Practices – Reviewer/User level What are reviewer/user responsibilities? Additional Resources and Q&A

BACKGROUND What are Procurement Cards? Personal charge cards that have the ability to set individual charge limits (daily and monthly), transaction limits, and merchant type restrictions.

BACKGROUND What are the advantages of using procurement cards? Streamlines low-value purchases (less use for petty cash) Timely payment of vendors Eliminates individual payments to vendors Ability to pay outside vendors and online vendors Ability to set individual spending limits

BACKGROUND What are the disadvantages of using procurement cards? In some instances increased documentation Opportunities for fraudulent, improper and abusive purchases Fraudulent – personal purchases not for government use Improper – purchases that are for government use but not permitted by law or policy (split purchases, purchases not from preferred vendors, certain travel) Abusive – Purchases of authorized goods or services at terms (price/quantities) that are excessive, questionable need or both.

Responsibilities of Management Administration of the Program Procurement card manual Approving users and limits Training of users Standardized procedures both for the users and reviewers Monitoring of implementation Use of data mining to identify unusual transactions

RESPONSIBILITIES OF USERS/REVIEWERS Ensure compliance with policies and procedures Documentation Competitive bids Proof of receipt of goods What are violations / restricted uses? Prevent and detect misuse of cards through internal controls Reporting of misuse and violations Cancellation of cards upon termination

ADDITIONAL RESOURCES GAO – Audit guide http://www.gao.gov/new.items/d0487g.pdf COSO – Internal control guidance http://www.coso.org/ic.htm CA State Procurement program resources http://www.dgs.ca.gov/pd/Programs/CALCard.aspx Recent Internal Audit of Procurement Card – San Diego http://www.sandiego.gov/auditor/reports/fy13_pdf/audit/13-003_pcard.pdf Recent SCO Audit of Procurement Card http://www.sco.ca.gov/Files-AUD/03_2012saa_caltranscalcard.pdf

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