1. Internal Controls & Training
2019 SASBO Annual Conference
P-Card
Internal Controls & Training

3. Establishing Internal Controls

4. Establishing Internal Controls
Internal Controls must be established in order to allow a P-Card program to function as a successful, long-term purchasing solution.
Effective internal controls will make card users accountable and responsible while reducing the opportunity for collusion and fraud.

6. Establishing Internal Controls
Internal Control needing to be addressed
Structure of approval roles
Blocks and Restrictions
Calendar of Events
Penalties for Non-compliance
Audits and Reviews
Support Documents

7. Establishing Internal Controls
Structure of Approval Roles
P-Card programs must have a system of checks and balances where multiple levels are approving transactions to prevent misuse or fraud.
The roles in a P-Card program should be clearly defined in both policy and the day-to-day operations.
You want 4 levels of approvals per transaction:
P-Card Coordinator – Admin Asst., School Treasurer
Cardholder Manager – Principal, Department Director
P-Card Manager/Administrator – Purchasing Dept.
Accounting Administrator – Finance Officer

8. Establishing Internal Controls
Structure of Approval Roles

9. Establishing Internal Controls
Blocks and Restrictions
Allowing P-Cards to be used at certain merchants or only purchasing specified items must be a part of the internal controls.
Most card providers have multiple ways you can institute blocks on P-Cards.
School systems should also define what purchases would and would not be allowed on P-Cards.

10. Establishing Internal Controls
Blocks and Restrictions
Most commonly used blocks from card providers
Merchant Commodity Codes (MCC)
This is a 4 digit number that defines the type of merchant and the school system would define which are valid for use.
Credit Limits / Spending Limits
Most card providers can allow multiple dollar limits on card use such as monthly or transaction limits.

11. Establishing Internal Controls
Blocks and Restrictions

12. Establishing Internal Controls
Blocks and Restrictions

14. Establishing Internal Controls
Blocks and Restrictions
Most commonly used restrictions
Who is allowed to use a card
Budget Code restrictions
Different MCCs for specific departments or individuals
Equipment or items being purchased via State Contract
Items for personal use

15. Establishing Internal Controls
Blocks and Restrictions

16. Establishing Internal Controls
Blocks and Restrictions

17. Establishing Internal Controls
Calendar of Events
Creating a calendar of events is a good internal control feature because users know that certain program expectations have to be met and that non-compliance could result in P-Card program penalties.
You may want to combine your P-Card calendar with our Accounts Payable calendar since both are related in getting the bills paid.

18. Establishing Internal Controls
Calendar of Events

19. Establishing Internal Controls
Penalties for Non-compliance
Accountability and Responsibility are two critical factors in effective internal controls for your P-Cards.
P-Card programs must have enforceable penalties so card users understand that having a P-Card is a privilege and not a right.
Develop a P-Card Violation Form each time a P-Card is not used within the program rules.

20. Establishing Internal Controls
Penalties for Non-compliance
Common Types of P-Card Violations:
Failure to Review or provide documentation on time
Lack of documentation
Splitting transactions to circumvent card limits or bidding requirements
Inappropriate purchase
Personal purchase

21. Establishing Internal Controls
Penalties for Non-compliance

22. Establishing Internal Controls
Penalties for Non-compliance
Typical Standard Suspension Process:
30 Days at 3rd violation of the current fiscal year
60 Days at 4th violation of the current fiscal year
Indefinitely at 5th violation of the current fiscal year
Cardholder Manager may apply for reinstatement of privileges in writing to the P-Card Manager after 75 days.

23. Establishing Internal Controls
Audits & Reviews
Periodic audits and reviews of P-Card transactions also adds to the internal controls by providing a “second look” of suspected transactions beyond the approval process and helps when there could be a possibility of collusion to commit fraud.
Use reports and data in your card provider’s program to help determine if any transactions need more detailed reviews. Card providers now offer receipt imaging in their programs.

24. Establishing Internal Controls
Audits & Reviews
Items to look for in Audits & Reviews
Proper documentation of the transaction
Any unusual items on the receipt
Maintaining their transactions on some type of ledger to track card balances
Are approvals being done on a regular basis
Login frequency to the card provider’s program
P-Card location is known at all times

25. Establishing Internal Controls
Support Documents
Having documents throughout the P-Card program are good internal controls to support the activity from start to finish.
Documents should be established in every area of the program so each card user understands their responsibility in the success of the whole program.
Support Documents also provide information to outside entities that the program does have processes in place to protect the taxpayer’s interest.

26. Establishing Internal Controls
Support Documents
Examples of Support Documents used by TCS
Cardholder Agreement
Online Training Completion
P-Card Tracking Log
Food Pre-approval
P-Card Ledger
Missing Documentation
Encumbrance Request

27. Establishing Internal Controls

28. Establishing Internal Controls

29. Establishing Internal Controls
RFID CARD SLEEVES

30. Training & Training Materials

31. Training & Training Materials
If you expect the P-Card program to succeed, then the training and training materials you provide to the employees will be the determining factor.
Training must be looked at as an ongoing process and must be updated periodically as the program grows and becomes more efficient.
Training materials must be readily available and serve as a knowledge base to employees.

32. Training & Training Materials
Be sure to provide some type of training class at last every quarter and spend most of the time is going over problems you see in the program.
While in Charlotte-Mecklenburg, I held training sessions once a month and had it open to any card user to come and get problems solved and to create a bond of success.
It is incumbent that card users are provided a positive atmosphere of success. They must believe that you will not let them fail if they do their part.

33. Training & Training Materials
Examples of Training Materials used
P-Card Website
Online Training
Tutorials
Newsletters
Card Provider’s Help inside their program

34. Training & Training Materials

35. Training & Training Materials

36. Training & Training Materials

37. Training & Training Materials

39. Training & Training Materials

40. Good Resource for more information:
National Association of Purchasing Card Providers (NAPCP)

41. Chief Financial Officer Thomasville City Schools, Thomasville, NC
Scott Powell
Chief Financial Officer
Thomasville City Schools, Thomasville, NC