Overview
During our audit period, a contracted employee who was a BCArc related party—the spouse of BCArc’s president and CEO—either used or benefited from 14 BCArc credit card purchases, totaling $2,057. For 7 of these purchases, she used BCArc’s American Express card—the one assigned to BCArc’s president and CEO—to purchase gifts for a BCArc-related conference. The remaining 7 purchases were for her to participate in BCArc-related activities with her spouse and included dinners, meetings, and hotel stays, of which only two purchases, totaling $392, were reimbursed to BCArc. Personal use of a company credit card is an unsound business practice and creates a higher risk of card misuse.
Authoritative Guidance
BCArc’s contract with the person in question states, “I understand that as a non-employee I am not eligible for any of the BCARC employee benefits.” This would include the use of any company credit cards. The contract also states, “The Facilitator is not an employee of Berkshire County Arc. The Facilitator understands and agrees that Berkshire County Arc will not provide to the Facilitator any benefits or services.”
Reasons for Issue
BCArc’s president and CEO stated that these purchases were for legitimate agency expenses. BCArc credit card policies do not expressly restrict the use of cards to employees, and there are no monitoring controls in place to detect any card use by any unauthorized individuals, such as contractors.
Recommendations
- BCArc should amend its credit card policies to limit card use to employees and establish monitoring controls to ensure that all employees and contractors comply with this requirement.
- BCArc should improve its internal controls over credit cards to prevent the cards from providing a personal benefit to anyone.
Auditee’s Response
BCArc adheres to a formal conflict of interest policy and at no time did the wife of BCArc’s CEO (Consultant) use a BCArc credit card.
The Consultant was contracted to help organize and run a family support conference for the Berkshires, an assignment that was fully divulged and approved by BBOD vote prior to BCArc entering a contract with Consultant for services. The Consultant was hired and supervised by the COO—not the CEO—who reviewed . . . the program, budget, and progress with the BBOD. The Consultant discounted her rate and charged below-market value for her fee. The Consultant is uniquely qualified to deliver the contracted programs to BCArc employees.
In preparation for this conference at issue, the Consultant and the organizing committee sought approval to purchase numerous items for the conference, which were approved by the COO . . . who arranged for the purchase of the items. At no time did the Consultant use a BCArc credit card to make these purchases—they were made by BCArc staff.
Auditor’s Reply
The documentation provided to us by BCArc, both during our audit and with its response, indicates that the purchases in question were made by the consultant and were not approved by the COO until after they were made. Further, BCArc does not comment on the seven purchases we found that the consultant made to pay for her personal expenses associated with participating in BCArc-related activities with her spouse, only two of which (totaling $392) were reimbursed to BCArc.
We again urge BCArc to implement all our recommendations on this matter to prevent these issues from reoccurring.
| Date published: | May 25, 2021 |
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