Purchasing card program : eleven state agencies and two university units

52 Pages·2001·1.3 MB·English

by  Montana. Legislature. Legislative Audit Division

Legislative Audit Division
StateofMontana
ReporttotheLegislature
Limited Scope Performance Audit
September2001
Purchasing Card Program
ElevenStateAgenciesandtheTwoUniversityUnits
Thislimitedscopeperformanceauditprovidesinformationaboutthestate's
PurchasingCardProgram. Weprovideinformationoncarduse,typesof
itemspurchasedwithcards,purchasingcardcontrols. Overall,oursample
ofcardtransactionsshowedpurchasesmadewithpurchasingcardswere
reasonable.
ST/ITE DOCUMENTS
COLLECTIO,
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MONTANA STAfE L.br "Y
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Directcomments/inquiriesto:
LegislativeAuditDivision ^O^^TMA
Room 160,StateCapitol STATE L^IAar
POBox201705
OlP-03 HelenaMT 59620-1705
Helpeliminatefraud,waste,andabuseinstategovernment CalltheFraudHotlineat 1-800-222-4446statewideor
444-4446inHelena.
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PERFORMANCEAUDITS
Performance audits conducted by the Legislative Audit Division are designed to assess state
governmentoperations. Fromtheauditwork,adetermination ismadeastowhetheragenciesand
programs are accomplishing their purposes, and whether they can do so with greater efficiency
and economy. The audit work is conducted in accordance with audit standards set forth by the
UnitedStatesGeneral AccountingOffice.
Members of the performance audit staff hold degrees in disciplines appropriate to the audit
process. Areas of expertise include business and public administration, statistics, economics,
accounting, logistics,computerscience, andengineering.
Performance audits are performed at the request ofthe Legislative Audit Committee which is a
bicameralandbipartisan standingcommitteeoftheMontanaLegislature. Thecommitteeconsists
ofsix membersoftheSenateandsixmembersoftheHouseofRepresentatives.
MEMBERSOFTHELEGISLATIVEAUDITCOMMITTEE
LEGISLATIVE AUDIT DIVISION
ScottA. Seacat,LegislativeAuditor Deputy LegislativeAuditors:
JohnW. Northey,LegalCounsel JimPellegrini. PerformanceAudit
Tori Hunthausen, ISAudit&Operations
JamesGillett. Financial-ComplianceAudit
September2001
TheLegislativeAuditCommittee
OftheMontanaStateLegislature:
Thisisourlimitedscopeperformanceauditofthestate'sPurchasingCardProgram(ProCard)
administeredbytheDepartmentofAdministration,MontanaDepartmentofTransportation,The
UniversityofMontana,andMontanaStateUniversity.
Thereportprovidesinformationtothelegislatureconcerningpurchasingcardusebystateanduniversity
employees,andpurchasingcardcontrolsinplaceatasampleofstateagenciesanduniversityunits.
Overall,wefoundpurchasesmadewithProCardsarereasonable.
We wishtoexpressourappreciationtothedepartmentsanduniversityunitsstafffortheircooperationand
assicsftnannrcpe
Respectfullysubmitted.
A.
ScottA. Seacat
LegislativeAuditor
Room 160.StateCapitolBuildingPOBox201705Helena.MT 59620-1705
Phone[phone] FAX[phone] [email protected]

Legislative Audit Division
Limited Scope Performance Audit
Purchasing Card Program
ElevenStateAgenciesandtheTwoUniversityUnits
MembersoftheauditstaffinvolvedinthisauditwereTomCooper, Susan
Jensen,JoeMurray,JimNelson, KentRice, KentWilcox, KrisWilkinson,and
MaryZednick.

1
Table ofContents
ListofTables andFigures ii
AppointedandAdministrativeOfficials iii
ReponSummary S-i
ChapterI-Introduction 1
Introduction
1
AuditObjectives 1
AuditScopeandMethodology
I
DataLimitations 2
IssuesforFurtherStudy 3
ReportOrganization 4
ChapterII -Background 5
Introduction 5
PurposeofPurchasingCards 5
SoftwareProvidedtoTrackTransactions 5
AccesstoSoftwareandInformation isControlled 6
SomePurchasingDetailsRecorded 6
ReportscanbeGenerated 6
ProcessforObtainingandUsingaCard 7
UseLimitsPlacedonCards 9
CardActivityReconciledtoPARIS 10
ProCardProgramscanbeDecentralized 1
CardUse 12
TypesofItemsPurchased 13
RebatesBasedonCardUse 16
ChapterIII-FutureUtilizationandProCardControls 17
Introduction 17
ProCardProgramGrowing 17
AmountPurchasedwithProCardsIncreasing 17
Control Review Results 18
PurchasesReasonable 20
SomeAgenciesCouldIncreaseControls 20
BasicCardUseControls 20
ReceiptsReconciledtoStatements 21
Follow-upforMissingReceipts 21
SegregationofDuties 21
EnhancedManagementControls 22
RequiringLogsorForms 22
CardLimits 23
CustomizingPoliciesandProcedures 23
TrainingCardholdersonCardUse 23
Conclusion 24
AgenciesResponses 27
AppendixA A-1
Page
i
1
List ofFigures and Tables
Figures
Figure 1 StepstoEstablishProCardProgramandDistributeCards 8
Figure2 ProcessforPurchasingItemsandPayingGECapital 1
Figure3 PurchasingCardUse 12
Tables
Table 1 TransactionsNotAllowedwiththeProCard 9
Table2 Top 10VendorsinCalendarYear2000ThroughOctober31 13
Table3 DollarAmountsSpentbyMerchantCategory 14
Table4 NumberofTransactionsbyMerchantCategory 15
Table5 Rebates 16
Table6 ComparisonofProCardUsageforSelectedItems 18
Pageii
Appointed and Administrative Officials
DepartmentofAdministration BarbaraRanf. Director
DepartmentofTransportation DavidA. Gait. Director
TheUniversityofMontana George M. Dennison, President
MontanaStateUniversity Dr. GeoffreyGamble. President
Pageiii