Purchasing Card Reviewer Training

Purchasing Card Benefits Convenience Convenience Faster receipt of needed supplies Faster receipt of needed supplies Reducing purchase orders Reducing purchase orders More vendors to choose from More vendors to choose from Reducing the number of checks issued Reducing the number of checks issued Cost savings; * the cost of traditional purchase order is $89.11, the cost of using purchasing cards is $21.83 Cost savings; * the cost of traditional purchase order is $89.11, the cost of using purchasing cards is $21.83 *2007 Purchasing Card Benchmark Survey Results-RPMG Research Corporation *2007 Purchasing Card Benchmark Survey Results-RPMG Research Corporation

We will cover: Cardholder Responsibilities Cardholder Responsibilities Restrictions Restrictions Purchases Requiring Approval Purchases Requiring Approval Changes to Cardholder Information Changes to Cardholder Information Reviewer’s Responsibilities Reviewer’s Responsibilities Establishing the Review Process Establishing the Review Process Leaving the Department Leaving the Department Location of Forms Location of Forms Purchasing Card Fraud Purchasing Card Fraud Contact Information Contact Information

Cardholder’s Responsibilities Making only authorized purchases Making only authorized purchases Obtaining a detailed receipt for each purchase Obtaining a detailed receipt for each purchase Completing the transaction log with a brief description justifying the purchase Completing the transaction log with a brief description justifying the purchase Reconciling the monthly Visa statement Reconciling the monthly Visa statement Resolving any discrepancies Resolving any discrepancies

Cardholder’s Responsibilities (con’t) Ensuring credits are received Ensuring credits are received Signing the log Signing the log Passing the paperwork to assigned Reviewer for approval in a timely manner Passing the paperwork to assigned Reviewer for approval in a timely manner Note: Reallocation of charges may be the responsibility of the cardholder. However, budget management is the responsibility of the department head. Note: Reallocation of charges may be the responsibility of the cardholder. However, budget management is the responsibility of the department head.

Reconcile Monthly VISA Statement Compare VISA statement to transaction log and resolve any discrepancies prior to the end of the following billing cycle. Compare VISA statement to transaction log and resolve any discrepancies prior to the end of the following billing cycle. Keep all receipts and related paperwork (VISA statement, signed transaction log) for (5) five years. Keep all receipts and related paperwork (VISA statement, signed transaction log) for (5) five years. Forward entire package to reviewer within 3 days of completion Forward entire package to reviewer within 3 days of completion

Restrictions

Restrictions at Point of Sale These transactions will be declined by the bank: Purchases exceeding the single purchase limit or monthly credit limit Purchases exceeding the single purchase limit or monthly credit limit Cash advances Cash advances Restrictions by merchant category Restrictions by merchant category Travel (Hotels, Airfare, Car Rentals) Travel (Hotels, Airfare, Car Rentals) Restaurants, liquor stores Restaurants, liquor stores Entertainment, recreational services Entertainment, recreational services Personal services such as photographic studios, funeral services, salons, spas Personal services such as photographic studios, funeral services, salons, spas

State and University Restrictions These transactions may not automatically decline, but are not allowed. They will be monitored for compliance through the review policy These transactions may not automatically decline, but are not allowed. They will be monitored for compliance through the review policy Personal purchases Personal purchases Cash Equivalents (ex. Gift Cards) Cash Equivalents (ex. Gift Cards) Gifts, contributions, and donations (such as alcohol and flowers) Gifts, contributions, and donations (such as alcohol and flowers) Alcohol for any purpose Alcohol for any purpose Allowing someone else to use the card Allowing someone else to use the card

State and University Restrictions (con’t) Personally accepting kickbacks or incentives Personally accepting kickbacks or incentives Entertainment (costs of social activities and related incidental costs such as meals, beverages, lodging, transportation, and gratuities) Entertainment (costs of social activities and related incidental costs such as meals, beverages, lodging, transportation, and gratuities) Splitting purchases to avoid limit of delegated authority ($2,500) is prohibited Splitting purchases to avoid limit of delegated authority ($2,500) is prohibited

State and University Restrictions (con’t) Office supplies purchased from vendors other than the mandatory state contract with Office Depot Office supplies purchased from vendors other than the mandatory state contract with Office Depot Mandated state contract Mandated state contract Food purchases Food purchases Tires Tires Computers Computers

Purchases Requiring Additional Approval Licenses, contracts, and agreements must be sent to Purchasing Department for approval. Cardholders are not authorized signatories for the University Licenses, contracts, and agreements must be sent to Purchasing Department for approval. Cardholders are not authorized signatories for the University Telecommunications equipment (antenna, satellite installations, 2-way radios) Telecommunications equipment (antenna, satellite installations, 2-way radios) Modifications to building Modifications to building

Changes to Cardholder Information Request changes by contacting the Purchasing Department Request changes by contacting the Purchasing Department Cardholder Name or Address Change Cardholder Name or Address Change Default Account Change Default Account Change Cancel Card Cancel Card Single Purchase or Monthly Credit Limit Change (as a minimum, requires department head and purchasing department approval) Single Purchase or Monthly Credit Limit Change (as a minimum, requires department head and purchasing department approval)

Reviewer’s Responsibilities

Reviewer is the cardholder’s immediate supervisor or someone within the cardholder’s chain of command Reviewer is the cardholder’s immediate supervisor or someone within the cardholder’s chain of command Reviewers are required to ensure that charges are valid, authorized, are within ASU Beebe Purchasing Card policy and procedures, and are appropriately documented Reviewers are required to ensure that charges are valid, authorized, are within ASU Beebe Purchasing Card policy and procedures, and are appropriately documented A Reviewer may not review his/her own transactions A Reviewer may not review his/her own transactions

Reviewer’s Responsibilities (con’t) At the end of each billing period, the Reviewer is required to: At the end of each billing period, the Reviewer is required to: Review the transaction log to ensure all entries are authorized Review the transaction log to ensure all entries are authorized Ensure detailed receipt matches the transaction and description of purchase Ensure detailed receipt matches the transaction and description of purchase Confirm each transaction is authorized and in compliance with ASU Beebe Purchasing policies and procedures Confirm each transaction is authorized and in compliance with ASU Beebe Purchasing policies and procedures Confirm that no one other than the cardholder gained access to the card information Confirm that no one other than the cardholder gained access to the card information

Reviewer’s Responsibilities (con’t) Sign the monthly transaction log for all cardholders for whom they review, certifying all transactions are authorized and that policy and procedures have been followed Sign the monthly transaction log for all cardholders for whom they review, certifying all transactions are authorized and that policy and procedures have been followed Forward to the Purchasing Department Forward to the Purchasing Department

Reviewer’s Responsibilities (con’t) Retain the records in chronological order in the department’s office, and securely maintain the files for a minimum of 5 years. Retain the records in chronological order in the department’s office, and securely maintain the files for a minimum of 5 years.

Establishing the Review Process

At the discretion of the Reviewer, departments may require pre- authorization prior to cardholder making a purchase At the discretion of the Reviewer, departments may require pre- authorization prior to cardholder making a purchase

Establishing the Review Process (con’t) You may have an administrative person perform initial review of records: You may have an administrative person perform initial review of records: Ensure a detailed receipt is in the file, and that the receipt matches the description on the log Ensure a detailed receipt is in the file, and that the receipt matches the description on the log Reconcile credit card statement to the transaction log Reconcile credit card statement to the transaction log Place receipts in same order as listed on the statement Place receipts in same order as listed on the statement

Establishing the Review Process (con’t) Ask Questions – have a clear understanding of why the purchase was made and who authorized it. Ask Questions – have a clear understanding of why the purchase was made and who authorized it. Only the Reviewer (supervisor) can: Only the Reviewer (supervisor) can: Certify that transactions are authorized (have you reviewed the receipt?) Certify that transactions are authorized (have you reviewed the receipt?) Sign the actual transaction log Sign the actual transaction log

Leaving the Department?

If the cardholder leaves the department If the cardholder leaves the department Cardholder or Reviewer Notifies the Purchasing Department Cardholder or Reviewer Notifies the Purchasing Department Brings the card to the Purchasing Department Brings the card to the Purchasing Department Reviewer performs complete assessment of all transactions Reviewer performs complete assessment of all transactions

Leaving the Department? (con’t) Reviewer to conduct an exit review of departing cardholder’s transactions Reviewer to conduct an exit review of departing cardholder’s transactions Ensure sensitive equipment (computers, digital cameras, etc.) are accounted for Ensure sensitive equipment (computers, digital cameras, etc.) are accounted for Take another look at all records Take another look at all records Trust everyone – review anyway Trust everyone – review anyway

Leaving the Department? (con’t) If the Reviewer leaves the department If the Reviewer leaves the department Another reviewer must be assigned to each cardholder Another reviewer must be assigned to each cardholder

Forms All forms associated with the Purchasing Card are available online at All forms associated with the Purchasing Card are available online at Faculty Staff Purchasing

Purchasing Card Fraud

What is Fraud? A deception deliberately practiced in order to secure unfair or unlawful personal gain What Fraud is Not MisuseNegligence

Misuse Restricted purchases made for the institution - not for personal gain Restricted purchases made for the institution - not for personal gain Examples of misuse include: Examples of misuse include: Purchasing restricted goods and services (ie. Travel Computers, Office Supplies, Food) Purchasing restricted goods and services (ie. Travel Computers, Office Supplies, Food) Intentionally splitting a purchase to circumvent delegated authority (either by the initiative of cardholder or departmental authority) Intentionally splitting a purchase to circumvent delegated authority (either by the initiative of cardholder or departmental authority) Paying unfair and unreasonable prices, not making good business decisions Paying unfair and unreasonable prices, not making good business decisions Allowing someone else to use the card Allowing someone else to use the card

Negligence Sloppy recordkeeping - not for personal gain Sloppy recordkeeping - not for personal gain Unsecured record retention Unsecured record retention Lack of any receipt Lack of any receipt Missing statements Missing statements Lack of additionally required documentation Lack of additionally required documentation

Consequences of Misuse and Negligence Report misuse and negligence to the Purchasing Department Report misuse and negligence to the Purchasing Department Suspend card until cardholder attends another training Suspend card until cardholder attends another training Institute the “3 strikes, you’re out” rule Institute the “3 strikes, you’re out” rule Cancel the card Cancel the card

Back to Fraud Why does fraud occur? Why does fraud occur? How does fraud occur? How does fraud occur?

Why Does Fraud Occur? Inattentive Reviewers - cardholders won’t take the risk if they know their transactions are carefully reviewed Inattentive Reviewers - cardholders won’t take the risk if they know their transactions are carefully reviewed Fraud is a premeditated, calculated act to defraud institution Fraud is a premeditated, calculated act to defraud institution Crime of necessity (personal financial need) Crime of necessity (personal financial need) Crime of passion (desperation) Crime of passion (desperation) Incident of bad judgment Incident of bad judgment Program Weaknesses Program Weaknesses

Program Weaknesses Department unnecessarily has too many cardholders Department unnecessarily has too many cardholders Reviewers responsible for too many cardholders Reviewers responsible for too many cardholders Insufficient training Insufficient training Faltering Reviewer (very dangerous as this is the first line of defense) Faltering Reviewer (very dangerous as this is the first line of defense) We must have proper mechanisms installed to detect and halt fraud We must have proper mechanisms installed to detect and halt fraud

How Does Fraud Occur? Services paid for, but not received by the University (usually involves two individuals) Services paid for, but not received by the University (usually involves two individuals) Personal purchases made, and removed from institution’s property or shipped to another location Personal purchases made, and removed from institution’s property or shipped to another location Personal purchases made in combination with authorized goods/services Personal purchases made in combination with authorized goods/services

Consequences of Fraud Restitution Restitution Termination of Employment Termination of Employment Fines Fines Criminal Prosecution Criminal Prosecution

Review, Review, Review Reviewers are the University’s first line of defense against purchasing card fraud. Purchasing card fraud is often a symptom of a bigger personnel issue. If you suspect purchasing card fraud, contact the Purchasing Department

Contact Information Robin Lancaster Jim Davidson