Effective internal controls are critical because even relatively small questionable transactions involving credit cards are virtually guaranteed to be the fodder of a newspaper article. Why is this? The average person on the street may not understand the high-level mathematics involved in the calculation of how much state revenue their school district earned last year; however, every reader of the local newspaper can comprehend an article about use of the school district’s credit card.
An effective control system over credit cards or “P-cards” includes:
- Provide training on appropriate use of school district’s credit card and filing receipts;
- Require designated employees/officials to sign-off on receipt of the district’s credit card use procedures and fraud policy;
- Implement procedures for locking credit cards in the safe when not in use (only a select few employees should be allowed to carry the card year-around, if necessary);
- Maintain a log of date and time the credit card was checked out/in;
- Require each individual credit card holder to compile a monthly report of credit card charges and provide original credit card slips along with copies of supporting receipts;
- Require supervisors to sign-off on credit card holders’ monthly report of credit card charges;
- Implement a centralized internal control function for the review and monitoring of all credit card transactions and investigation of potential questionable charges;
- Report unresolved potential questionable charges to key executive officers each month; and
- Suspend access to credit cards to individuals that are unable to satisfactorily resolve questionable charges in a timely manner.