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HomeMy WebLinkAboutAudit Reports - Public - Transit Operations Procurement Card Audit - 10/16/2017 City Auditor’s Office 1 Transit P-Card Audit Date: October 16, 2017 To: Kevin R. Phelps, City Manager From: Candace MacLeod, City Auditor Subject: Procurement Card Audit – Transit Operations As part of the FY18 approved audit plan, the City Auditor’s Office conducted a procurement card (P-Card) audit of the Transit Operations Office (Transit) in the Transportation Department in August 2017 for the period June 14, 2016 to July 13, 2017. The purpose of the audit was to assess compliance with Finance’s P-Card Policies and Procedures (Policy). Transit manages the City-operated Dial-A-Ride and GUS programs and coordinates fixed route bus service. Transit is funded by the City’s Transportation Sales Tax that funds a comprehensive package of transportation projects. Transit has two cardholders that expended $38,027 on their P-Cards for the period under review. The auditor met with Transit staff and reviewed monthly cardholder statements. The following observations were noted. 1) Payments for contracted services without required documentation attached Charges totaling $15,390 to three vendors under contract with the city did not have the proper documentation attached. Policy states that cardholders may not use the P- Card to pay for contracted services unless the City Attorney Contract Signature Routing Form is attached, along with a signed copy of the contract with the assigned contract number. Although Transit did have the required documentation in their files, the risk of unauthorized charges increases if supporting contract documentation is not attached to P-Card transactions. 2) P-Card shared with another employee for one transaction One cardholder provided their P-Card to another employee in Transit to make a $513 phone payment for the bus pass program in August 2017. Policy states that P-Cards are assigned to individual employees and are prohibited from being used by anyone other than the designated employee. The sharing of P-Cards may lead to fraudulent activity or increase the risk that credit card information is compromised. 3) Food and meal expenses charged to the Transportation Sales Tax Fund Group food expenses totaling $405 were made without reporting the attendees’ names. In accordance with Policy, food expenses are allowed if they are supported by adequate documentation that includes the date, location, attendee’s names, and City Auditor’s Office 2 Transit P-Card Audit business purpose. Another $390 in meal expenses for Transit-related interview panels were made with the P-Card. All the food and meal expenses were charged to the Transportation Sales Tax Fund. However, a policy has not been developed by Transportation to address whether food and meal expenses can be charged to the Transportation Sales Tax Fund. Lack of guidance on food and meal purchases increases the risk that Transportation Sales Tax dollars are not expended as intended. 4) Hotel and registration charges without supporting documentation attached Charges totaling $1,005 for hotel accommodations and a conference registration had no written explanation or supporting documentation attached, such as meeting agendas and seminar dates. Policy states that charges should be explained and supported by backup documentation. 5) Purchases without documented business purpose or supporting documentation attached Nine transactions totaling $1,482 did not have a stated business purpose as required by Policy. We also identified four City of Phoenix bus pass program invoices totaling $3,288 that did not have supporting ridership documentation attached. Lack of explanation and supporting documentation reduces accountability and increases the risk that charges may not be accurate or comply with Policy. 6) One cardholder and a supervisor had not received P-Card training in several years One cardholder and their supervisor had not received P-Card training in several years. One of these cardholders received training during the audit. City Policy states that cardholders, supervisors/reviewers, and liaisons are encouraged to attend training at least annually. Lack of training increases the risk that policies and procedures are not understood or followed. 7) Other observations Our testing identified that Transit was using an outdated monthly checklist form that did not require signature dates from the cardholder or their supervisor. When forms are dated, it is much easier to monitor compliance with deadlines outlined in Policy. Monthly P-Card account statements were not always printed within three working days after the end of the billing cycle and Expense Reports were not provided to cardholders, as required by Policy. We also noted five credit card receipts totaling $1,218 that were not signed, as required by Policy, increasing the risk that charges are not properly reviewed or authorized. Additionally, non-capital items were purchased without logging the serial numbers, location, and individuals that were using the items. City Auditor’s Office 3 Transit P-Card Audit Recommendation Transportation should enhance controls to ensure compliance with the P-Card Policies and Procedures and train staff. A policy should also be developed to address whether food and meal purchases can be charged to the Transportation Sales Tax Fund. Management’s Response Concur. The appropriate staff have been briefed on all P-Card Policies and Procedures to ensure compliance in the future. While all missing documentation was on file and available, we were unaware of certain requirements to have them attached to specific purchases. Going forward, all policies and requirements will be strictly adhered to. 1) Payments for contracted services without required documentation attached Concur. As mentioned in the observation, all documentation (contract(s), Green Sheets, etc.) was on file, however, the appropriate correspondence was not attached to the corresponding invoices and P-Card transactions. The P-Card liaison as well as the other card-holder have both been instructed to ensure all P-Card purchases bought off an existing contract have all required contract documentation attached to the invoice, which is bundled with the monthly statement. 2) P-Card shared with another employee for one transaction Concur. This particular invoice was paid while the P-Card liaison, who normally pays this invoice, was out. Although this was a “one-time” incident, all P-Card holders, as well as appropriate staff who process invoices, have been briefed and educated on the City policy regarding the sharing of P-Cards and anyone using the P-Card other than the designated employee. 3) Food and meal expenses charged to the Transportation Sales Tax Fund Concur. Going forward, all food and meal expenses will include documentation stating attendee’s names, date, location, and business need (vacant position to be filled, public meeting/open house, etc.). Additionally, if food is purchased in support of a public meeting or open house, a copy of the sign-in sheet will be attached to the receipt and bundled with the monthly statement. As far as expending Transportation Sales Tax revenues on food and meal expenses, per this report’s and the City Attorney’s Office recommendation, Transit staff will work with the Transportation Director to develop a departmental policy regulating these type purchases. Estimated completion date: January 2018. City Auditor’s Office 4 Transit P-Card Audit 4) Hotel and registration charges without supporting documentation attached Concur. The P-Card holder who made the reservations did not print out the appropriate information such as confirmation, agendas, seminar dates, etc., at the time of booking the trip. The attendee of the conference provided all required information upon his return from the conference, and everything has been packaged to the appropriate statement. Going forward, hotel confirmations and conference agendas will be printed out at the time of reservation, and attached. The final approved travel report will also be attached for future reference. 5) Purchases without documented business purpose or supporting documentation attached Concur. Staff was not aware of requirement to annotate on actual invoice/receipt the nature and business need for each purchase. Both card-holders have been briefed that all receipts must have the business need written on it to explain the need for the purchase. As far as the four City of Phoenix Platinum Card Program invoices missing supporting ridership documentation, that information was provided during the review and subsequently attached to those statements. The same required information was attached to the other 8 monthly statements, so it was a case of the information not getting bundled for those 4 months. All future Phoenix invoices will have the required ridership information attached. 6) One cardholder and a supervisor had not received P-Card training in several years Concur. One card-holder did not attend training in 2016 but did attend the training held in August of this year. The other user/liaison was out during the August training, but she did attend in 2016. The reviewer was not aware of the requirement that he attend training annually. Staff is waiting to see if the Purchasing Department schedules additional training in 2017. 7) Other observations Concur. The liaison had not checked and was not aware that the monthly checklist form had been updated. The Auditor’s Office provided the current form and that form has been integrated into the monthly process effective immediately. The liaison is now aware that all account statements must be printed within 3 working days after the end of the billing cycle (also effective immediately with August’s billing cycle). Expense reports are now being provided to the other card-holder, per city policy. Additionally, all receipts will be signed. If signature is done via kiosk at the place of purchase, the card-holder will sign the printed copy of the receipt. City Auditor’s Office 5 Transit P-Card Audit And finally, staff was not aware of the requirement to log small, non-capital items purchased with the P-Card. Going forward, each section supervisor will log non- capital items in a spreadsheet to track the location of the items and individuals using them. We would like to thank staff for their assistance during the audit. cc: Michael Bailey, City Attorney Lisette Camacho, Assistant Director of Budget and Finance Tom Duensing, Assistant City Manager Trevor Ebersol, Director of Transportation Jack Friedline, Assistant City Manager Kevin Link, Transit Administrator Vicki Rios, Director of Budget and Finance