Audit Report on the use of Procurement Cards by the Fire Department

AUDIT REPORT IN BRIEF

The audit determined whether the Fire Department (FDNY) has adequate internal controls over the use of procurement cards (p-cards). P-cards are credit cards used by City personnel for purchasing goods and services for City programs and operations. During Fiscal Year 2007, FDNY had 11 active purchasing card users with transactions totaling $93,496, and 8 active travel card users with transactions totaling $103,664.

Audit Findings and Conclusions

The FDNY has inadequate internal controls over the use of p-cards. The FDNY allowed purchases to be made by individuals who were not cardholders and had an inadequate independent review of p-card purchases. P-card purchases lacked receipts, receiving reports, and user logs. In addition, there was an inadequate segregation of duties with regard to p-card transactions. As a result of these weaknesses, there is an increased risk that errors and unauthorized charges may go undetected, and an increased potential for fraud or the misappropriation or misuse of funds.

Audit Recommendations

Based on our findings, we make eight recommendations, five of which are listed below. The FDNY should:

• Ensure that only authorized cardholders use the p-cards.

• Reevaluate the p-card program to determine whether it is necessary to issue more cards to prevent purchases made by unauthorized individuals.

• Ensure that one unit is assigned the responsibility of conducting an adequate, independent review of p-card purchases and that the review is sufficiently documented and performed prior to authorizing payment.

• Ensure that cardholders submit receipts and receiving reports for all purchases to the Accounts Payable Unit. If a receipt or receiving report is not available, a note indicating the reason should be attached to the purchase log.

• Require all cardholders to maintain and submit logs of p-card purchases to the Accounts Payable Unit to aid in the reconciliation of the monthly statements.

FDNY Response

In its response, FDNY officials generally agreed with the audit’s findings and recommendations.