Audit Report on The use of Procurement Cards by The Department of Transportation

AUDIT REPORT IN BRIEF

The audit determined whether the Department of Transportation (DOT) had adequate internal controls over the use of procurement cards.

Audit Findings and Conclusions

DOT has monetary restrictions for cardholders, maintains a monthly log of purchases by cardholders, pays credit card bills within the contractually stipulated timeframe, and sanctions unauthorized or inappropriate use of procurement cards. However, based on the weaknesses we identified, we concluded that DOT has inadequate internal controls over its use of procurement cards. These weaknesses include:

• Lack of documentation to support pre-approval of purchases.
• Additional pre-approvals not obtained for 21 (64%) of the 32 purchases requiring them.
• Lack of receipts and receiving reports to verify cost and receipt of purchases.
• Lack of inventory records for purchases of equipment.
• Inadequate segregation of duties among persons responsible for purchasing and for receiving of goods.
• Improper purchase of items available through DCAS (Department of Citywide Administrative Services) Requirements Contracts or the Central Storehouse.
• User Agreements not on file for five (9%) of the 58 cardholders.
• Purchases split to avoid exceeding the $2,500 per purchase limit.
• Lack of procurement card training for cardholders.
• Purchases not tracked to determine purchasing patterns.

Audit Recommendations

We make 11 recommendations, including the following.

DOT should:

• Include in its guidelines that written pre-approval from a supervisor is required for all purchases.
• Ensure that cardholders obtain additional pre-approvals from Deputy Commissioners or other specified department heads when required.
• Maintain inventory records of equipment purchased with procurement cards. In addition, such items should be tagged, and a physical inventory should be conducted periodically.
• Segregate the duties of purchasing and receiving goods by assigning different employees to those tasks.
• Ensure that all cardholders read and sign an agreement prior to receiving a procurement card.
• Provide cardholders and their supervisors with training in the use of procurement cards.