HomeMy WebLinkAboutAudit Reports - Public - Transportation Department Procurement Card Audit - 10/23/2017
City Auditor’s Office 1 Transportation P-Card Audit
Date: October 23, 2017
To: Kevin R. Phelps, City Manager
From: Candace MacLeod, City Auditor
Subject: Procurement Card Audit – Transportation Department
As part of the FY18 approved audit plan, the City Auditor’s Office conducted a
procurement card (P-Card) audit of the Transportation Department (Transportation) in
September 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).
Transportation is responsible for the design and planning of improvements to the
transportation system, management of traffic signals and intelligent transportation
systems, and the management of streets. Twenty-one employees have been assigned
P-Cards in Transportation. Auditors selected a sample of 10 cardholders that expended
$253,655 on their P-Cards for the period under review.
The auditor met with division staff and reviewed monthly cardholder statements. The
following observations were noted.
1. Meal expenses paid with HURF and Transportation Sales Tax monies
Meal expenses totaling $149 were charged to the Signs and Markings and Traffic Design
and Development divisions, which are funded by the State’s Highway User Revenue
Fund (HURF). The Arizona State Constitution restricts the use of HURF revenue to street
and highway purposes such as right-of-way acquisition, construction, maintenance,
repair, and the payment of interest and principal on HURF bonds. Additionally, $657 in
meal expenses were charged to the Intelligent Transportation Systems and
Transportation Education divisions, which are funded by the Transportation Sales Tax.
The City has not developed a policy to address whether meal expenses can be
charged to the Transportation Sales Tax and HURF funds. Lack of a policy increases the
risk that expenditures are not made in accordance with legal requirements.
2. Conference registration charges without supporting documentation
Charges totaling $5,455 for multiple conference registrations did not have adequate
supporting documentation attached, such as meeting agendas and seminar dates.
Policy states that charges should be explained and supported by backup
documentation. Additionally, one travel form totaling $1,432 from February 2017 was
not submitted to the employee’s supervisor and department director for post-travel
approval until October 2, 2017, nearly seven months after the travel occurred. Finance
Administrative Policy No. 7 requires travels forms to be completed within 30 days after
the travel occurs.
City Auditor’s Office 2 Transportation P-Card Audit
3. Payments for contracted services without required documentation attached
Charges totaling $2,627 to three vendors under contact 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 Transportation 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.
4. Meal expenses without reporting attendees’ names
Five meal expenses totaling $275 were made without reporting the attendees’ names.
In accordance with Policy, meal expenses are allowed if they are supported by
adequate documentation that includes the date, location, attendee’s names and
business purpose.
5. Monthly checklists completed without cardholder and supervisor signatures
Two monthly checklists were noted that did not include the cardholder’s signature and
four monthly checklists did not include the signature of the cardholder’s supervisor,
which are both required by Policy. Additionally, one checklist for April 2017 was not
completed until August 2017, over three months late. Our testing also identified that
Transportation used an outdated monthly checklist form between the months of July
and December 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.
6. Cardholders had not received P-Card training
Three cardholders did not attend the P-Card training in August 2017 and Transportation
has no record of any previous training they attended. 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
Two purchases totaling $501 included a credit card receipt, but did not include an
itemized cash register receipt, paid invoice, or payment confirmation, as required by
Policy. Non-capital IT equipment such as computer monitors, printers, and a camera
totaling $1,022 was purchased without receiving pre-approval from the Innovation and
City Auditor’s Office 3 Transportation P-Card Audit
Technology Department and without logging the serial numbers, location and
individuals that were using the items.
Recommendations
Transportation should enhance controls to ensure compliance with the P-Card Policies
and Procedures and train staff. A policy should be developed to address whether meal
expenses can be charged to the HURF and Transportation Sales Tax funds.
Management’s Response
1. Meal expenses paid with HURF and Transportation Sales Tax monies
Concur. Transportation staff will work with City Management/Attorney’s office to
develop a policy addressing meal expenses charged to the Transportation Sales Tax
and HURF funds. Estimated completion date: January 2018.
2. Conference registration charges without supporting documentation
Concur. P-Card holders and liaison will ensure proper documentation (including
conference fliers) is attached to monthly statements as well as travel reports. Travel
reports will also be completed and routed for signatures within 30 days after travel
occurs.
3. Payments for contracted services without required documentation attached
Concur. Proper documentation has been attached to the three charges in question.
Going forward, contracts and green sheets will be attached to transactions for
contracted services.
4. Meal expenses without reporting attendees’ names
Concur. P-Card holders will be reminded that meal expense documentation must
include names of attendees, date, location and business purpose.
5. Monthly checklists completed without cardholder and supervisor signatures
Concur. P-Card holders and liaison will ensure that monthly statement checklists are
completed with all necessary signatures and turned in within the allotted timeframe.
The liaison has been reminded to distribute the current monthly checklist to the
cardholders with their statements.
City Auditor’s Office 4 Transportation P-Card Audit
6. Cardholders had not received P-Card training
Concur. Transportation staff will be reminded that annual P-Card training is mandatory
for all liaisons, cardholders and supervisors of cardholders. However, we ask that more
training options be provided as not all employees are able to attend if only one time
and day is available. Perhaps an online refresher training could be an option.
7. Other observations
Concur. P-Card holders will ensure that receipts have adequate information or will
document proper information themselves on the receipt.
Regarding non-capital equipment, Transportation staff was unaware of this process for
small assets, but now understands the policy. Information for non-capital equipment will
be logged and tracked on a spreadsheet.
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
Vicki Rios, Director of Budget and Finance