COMMON AUDIT ISSUES
Auditing the Purchase Card Process
Audits are done of Purchase Card transactions on a random basis, with higher volume cardholders more likely to be selected due to both transaction and dollar volume. When a cardholder is picked for audit, we generally review the source documents for selected transactions and the related transaction logs. Our objectives are to review the control system in place for card use and the adequacy of the source documentation for the selected transactions.
The most common issues we encounter in these audits are:
Site managers
Being delegated to use a card but also responsible for reconciling use. This does not provide adequate independence. A site manager should never have purchase authority for a card they are responsible for monitoring.
Not notifying the Program Manager in Accounting Services (Yvonne Quamme at 5-9800) immediately when a cardholder leaves a department or changes job duties.
Only reviewing the purchase log submitted by a cardholder without looking at the actual receipt to ensure the description on the log agrees with the receipt. This can result in approval of questionable or unallowable purchases.
Not ensuring the cardholder turns in the receipts in a timely manner. Not obtaining the receipts with the log requires extra effort on the part of the site administrator in tracking missing receipts and obtaining documents or written explanations after the fact. Worse yet, in the case of extramural funding it can result in disallowance of the charge.
Not obtaining the funding source to be charged when a request to purchase is made, in which the purchase is subsequently transferred to another funding source. This information should be obtained initially to eliminate the need to re-contact the requester before processing the transfer.
Not obtaining the funding and authorization from a Principle Investigator or delegate when transferring a P-Card charge to a research project. Only an authorized individual may approve the expenditure of project funds. Federal auditors have disallowed charges to a project when there was no documentation of proper authorization and funding source. It is a good business practice to apply this documentation rule to any transfer of charges to other funding sources.
Not questioning the propriety of some transactions. This has proven embarrassing to some site managers when the auditors brought items to their attention. It can lead to cancellation of card privileges.
Allowing airfare or hotel charges on a card, but not having a system to cross check TERs submitted by employees to ensure such expenses are not also included on the TER. Prior approval by the Dean is required.
Cardholders
Not obtaining a signed designated user agreement from everyone authorized to use a card for purchases. A signed agreement is essential to documenting that a designee read and understands the rules associated with card usage. Without such an agreement on file the designee cannot be held responsible for violating card rules. In a worse case the cardholder could be held responsible for the unauthorized purchase.
Exceeding the allowable purchase limits on printing. State statutes prohibit the purchase of printing in excess of $50 unless from a contract printer. (See UW-Publications Printing Services Policy)
Not meeting the special record keeping requirements for headquarter city expenses. (See Headquarters City and UW-Sponsored Events Policy)
Not adequately securing the cards when kept in the office. We do have theft problems on campus so it is important that cards be secured if not carried by the cardholder.
Not retaining receipts of items purchased. If this is a recurring problem and undocumented purchases cannot be clearly explained, card privileges may be revoked. The cardholder can be held financially liable for purchases without properly documented receipts.
Not annotating what a purchase was when the receipt or order confirmation does not provide an adequate explanation. Likewise, not doing screen prints of items ordered on line or printing the confirmation notice.
Not keeping source documents at a designated site. The retention requirement for these records is six years, so it is important they be retained at a designated site where they can be retrieved on short notice.
Not reviewing the bi-weekly e-mail statement of charges to their card. This is a key control that will immediately identify any unauthorized card transactions if the cardholder reviews the statement.
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Multiple orders made over a small period of time to the same vendor (to avoid exceeding the daily purchasing card limits), increases the cost of shipping. Issuing a purchase order for multiple items eliminates multiple shipping charges and avoids violating the $5,000 purchase delegation limit.