Audit Report On The Use Of Procurement Cards By The Department Of Parks And Recreation

This audit determined whether the Department of Parks and Recreation (Parks) has adequate internal controls over the use of procurement cards (p-cards) and follows the guidelines set forth in Comptroller’s Memorandum #01-1. The scope of the audit was Fiscal Years 2004 and 2005.

Audit Findings and Conclusions

Based on our testing, we found that Parks provided initial training and guidelines to senior level staff at the start of the p-card pilot program in February 2001 and had all cardholders sign credit card agreements. In addition, Parks set transaction and monthly purchase limits on all cards, sent monthly statements to the agency’s Accounts Payable Unit for an independent review of the purchases, and paid its credit card bills within the contractually stipulated timeframe.

However, in view of the materiality of the control weaknesses, we have concluded that Parks has inadequate internal controls over its use of p-cards. These weaknesses can allow for the inappropriate use of p-cards and duplicate payments. Parks lacks adequate internal written procedures for the correct use of p-cards and does not sufficiently train new cardholders in their use. The agency allows individuals other than the cardholders to use the cards. In addition, the Accounts Payable Unit cannot adequately review p-card purchases because of incomplete documentation (especially the lack of receipts and receiving reports), problems with approvals, and the absence of a log of purchases.

The agency’s internal controls failed to prevent some purchases from being split to avoid exceeding transaction limits, sales taxes from being incorrectly paid, and purchases from being made without first checking requirement contracts. In addition, the agency failed to inventory items purchased with p-cards. Finally, an invoice can be paid twice because of the lack of integration between the p-card program and City’s Financial Management System (FMS).

Audit Recommendations

Based on our findings, we make 13 recommendations, including the following:

Parks should:

• Expand and formalize its written guidelines for p-cards. At a minimum, the guidelines should specify: who is allowed to use the p-cards, rules on appropriate purchases, and disciplinary procedures for inappropriate p-card use.
• Ensure that only cardholders use the p-cards.
• Ensure that the Accounts Payable Unit conducts an adequate independent review of p-card purchases.
• Ensure that cardholders submit receipts, receiving reports, and approval forms for all purchases.