Audit Report on the Use of Purchasing Cards by the Department of Citywide Administrative Services

We performed an audit on the Department of Citywide Administrative Services (DCAS) to determine whether it has adequate controls over the use of procurement cards (p-cards), whether it realized cost savings from its use of p-cards, and whether additional cost savings can be realized.

A p-card is an agency-issued credit card that allows micro-purchases¹ for needed goods and services to be made quickly and with a streamlined procurement process at an anticipated reduced administrative cost. DCAS, like the majority of City agencies, uses p-cards issued by Bank of America. DCAS had 12 active p-cards with 369 transactions totaling $259,995 during Fiscal Year 2010.

Audit Findings and Conclusions

For the most part, DCAS complied with the guidelines set forth in Comptroller’s Memorandum #01-1 and Mayor’s Office of Contract Services’ (MOCS’s) guidelines. The cardholders maintained receipts and invoices for all sampled p-card transactions, maintained procurement logs, and conducted monthly reconciliations. Additionally, user contracts were on file for all cardholders, the monthly statements and supporting documents were sent to the Audits & Accounts department for an independent review, and DCAS paid its credit card bills on time. The audit found no evidence that the sampled p-card transactions were intentionally split to circumvent the p-card purchasing limit.

However, we concluded that DCAS needs to improve its internal controls over its use of procurement cards. DCAS’s procedure for documenting receipt of goods purchased with p-cards is inadequate, and there was a lack of segregation of duties regarding the ordering and receipt of p-card purchases. In addition, DCAS does not maintain inventory records for or tag equipment purchased with p-cards. Further, DCAS incorrectly paid sales tax for some p-card purchases.

Audit Recommendations

Based on our findings, we make seven recommendations, including that DCAS should:

• Revise its procedure for documenting receipt of p-card purchases to include maintaining receiving reports, packing slips, or marked invoices and ensure that the receipt of goods and services is consistently documented.
• Ensure that the functions of ordering and receiving goods and services are adequately segregated.
• Maintain inventory records of equipment purchased with p-cards. In addition, items should be tagged and a physical inventory count should be conducted periodically.
• Remindcardholders of their responsibility to avoid sales tax payments and recoup the sales tax that has yet to be recouped.

Agency Response

In its response, DCAS officials generally agreed with six of the audit’s seven recommendations and partially agreed with the remaining recommendation.