Purchasing cards, better known as P-cards, are intended to provide an electronic trail of financial transactions. Individuals, businesses and especially governments continue to turn away from paper checks and more toward purchasing goods and services with pieces of plastic.
But P-cards are also recognized as being inherently more risky than other purchasing processes. That's a chief reason behind a recent audit of the City of Boise's use of P-cards. The city's Office of Internal Audit performed a full year's review--May 2010 to May 2011--of P-card transactions and the findings were rather telling.
In the 12-month period, more than $1.8 million in transactions was processed through city P-cards, a monthly average of $272,383, representing a 44.7 percent increase in P-card transaction dollars compared to the previous year. Additionally, the audit found that there was an average of 309 active cards among city employees through the 12-month period, with an average monthly spending of $871 on each card.
But it turns out that the city's control over its P-cards was not satisfactory. In fact, the audit discovered that a number of cards had not been closed out within a reasonable period after a cardholder was no longer employed by the city. The internal audit detected 10 card deactivations ranged from four days to as many as 81 days after the employee had been terminated.
In response to the audit, city managers are now promising to close P-cards within 48 hours of receiving notification of a termination of employment.
Another of the audit's findings revealed that a purchase was made by a city employee using a prohibited Merchant Category Code. The purchase, which Citydesk learned was for counseling services, was deemed to be appropriate, but according to the audit, "the potential for misuse of the cards was present."
Again, management promised to clean up its act by blocking as many as 20 prohibited MCC codes.
A summary of the audit was included in a quarterly status report reviewed by the Boise City Council on Feb. 7. The report included summaries of other audits of the city's Parks and Recreation Department and Library Operations. Both of those reviews resulted in a satisfactory rating.
Citydesk has learned that the Office of Internal Audit will revisit Boise's P-card process when it conducts another review beginning this July or August.