Purchase Cards Review Process
The purpose of the Purchasing Card Program is to streamline and simplify the requisitioning, purchasing and payment processes for small dollar transactions. The Program is designed to facilitate the approval process and reduce the paperwork of procurement procedures such as purchase orders, petty cash, check requests and expense reimbursements. The goals of the Program are to:
- Reduce the cost of processing small dollar purchases.
- Receive faster delivery of required merchandise.
- Simplify the buying and payment processes.
- Provide cardholders with empowerment to choose!
In order to ensure the ongoing integrity and success of the Purchase Card Program, Internal Audit conducts reviews of purchase card (P-Card) transactions. Reviews are initiated through a random selection of P-Card holders and/or due to factors such as high volume purchases, potential policy infractions and/or the appearance of unauthorized purchases.
The review process includes the following:
- A memorandum is sent to the card holder announcing the review.
- The card holder is called to schedule a date and time for the review.
- An interview and review of selected transactions is conducted by Internal Audit personnel in the office of the card holder or over the phone.
- A draft report is issued to the card holder detailing the results of the review.
- If areas of concern are identified, the card holder is asked to respond to Internal Audit within 30 days with a statement describing how the issues will be resolved and a timeframe for implementation.
- A final report including the card holder's response is sent to both the card holder and their supervisor.
The Purchase Card program requires card holders to maintain adequate records and to follow P-Card policies. Adequate records should include: itemized receipts, invoices, packing slips, Log Record Tracking Sheets, and other supporting documentation. To ensure a smooth review, Internal Audit recommends cardholders or business offices maintain tracking sheets in chronological order with all supporting documentation attached.
Internal Audit reviews P-Card transactions to determine compliance with University policies, appropriateness of purchases, and adequacy of internal controls. Potential policy violations that may be identified during the review include, but are not limited to (please see the P-Card Manual on Purchasing Service's website for a complete list):
- Sharing the P-Card.
- Meal purchases without adequate documentation such as a descriptive business purpose, itemized receipt, and a list of participants.
- Sales tax being charged.
- Travel expenses charged not related to recruitment or non-compensated independent contractors.
- Computer or printer purchases over $300.
Internal controls represent policies or procedures put in place to safeguard assets, provide reliable financial information, promote efficient and effective operations and ensure policy compliance. Some of the most important internal controls related to purchase cards include, but are not limited to:
- Management (account director) documenting approval of expenditures by signing receipts, tracking sheets, or a log of multiple receipts.
- Card holder signing of receipts documenting acknowledgement of purchases.
- Separation of duties - separating the purchasing function from the reconciliation function. If possible, the person making the purchase should not be the person who accounts for the purchase in the computer system (reconciliation). In small offices it is sometimes difficult to separate these functions. In those cases, documentation of management approval of expenditures can compensate for a lack of separation.
Internal Audit strives to keep disruption to your office at a minimum during the review process. Please contact Nick Shiosaki at 282-3046 or email at firstname.lastname@example.org if you have any questions, concerns, or ways we can improve our processes.