Best practices in financial management include the use credit cards or p-cards to reduce the costs of processing multiple purchase orders and check payments to vendors. However, school districts must have sufficient written procedures to avoid the kinds of issues that have been published in the newspaper in recent years. Red flags related to credit card or p-card issues include:
- Charges without receipts
- Charges without pre-approval on a purchase order
- Charges without a reason for the purchase
- Charges for online purchases
- Charges ranging from $10,000 to $50,000 under high credit limits
- Charges that exceed competitive procurement limits due to lack of monitoring or high credit limits
- Charges for various travel expenses that are not reported in travel reimbursement reports and certified by the employee as allowable costs
- Charges for late fees and interest
- Charges for hotel occupancy taxes that should have been exempt
- Charges for vehicle repairs
- Charges not reviewed monthly by employees’ supervisors
- Overall inconsistent use patterns
If certain issues listed above look familiar, it’s time to review your district’s written procedures and processes related to use of credit card or p-cards and look for opportunities for improvement. Recommended internal controls over credit cards and p-cards to consider include:
- Provide annual training to all employees issued cards and supplement with interim training for new employees hired later in the year
- Require sign-off on receipt of the district’s credit card use procedures and fraud policy;
- Lock credit cards in the safe when not in use;
- Keep a log of date and time the credit card was checked out/in;
- Require each individual to provide a monthly report; original credit card slips; and supporting receipts;
- Require supervisors to review monthly reports with attached backup for all credit card and p-card charges;
- Implement centralized review and monitoring of all credit card transactions and promptly investigate potential questionable charges;
- Implement and enforce procedures and policies for consequences for violating the district procedures, lack of receipts, misuse of the credit card, or using the credit card for unauthorized purchases
- Report unresolved potential questionable charges to key executive staff; and
- Suspend access to credit cards, as appropriate.
It’s important to ensure that best practices in financial management consistently work for districts through sufficient internal controls that include adequate written documentation of procedures and processes, in addition to covering reporting, monitoring and supervisory expectations in managers’ job descriptions.