Overview
NECC did not always obtain documentation, including preapprovals for travel and food purchases, for procurement card (P-Card) expenditures in accordance with its policies and procedures. Without proper approvals and adequate documentation to support the business purposes of the transactions made with P-Cards, NECC cannot ensure that purchases are for the college’s benefit.
We reviewed 100 of 6,938 P-Card transactions from the audit period and noted the following:
- Eight transactions did not have preapproved Travel Authorization Forms.
- Fifteen transactions for food did not have evidence of preapproval.
- Five transactions did not have adequate supporting documentation. Specifically, two receipts were unreadable; two Lost/Missing Receipt Forms were completed and approved when we requested them, not when the expenses occurred; and one receipt was not itemized as required.
Authoritative Guidance
Chapter 2 of NECC’s P-Card Policy & Procedures Manual, for fiscal years 2019 and 2020, states, “The cardholder will maintain adequate documentation to support the legitimate business purpose of all transactions made with the P-Card.”
Responsibilities listed in the “Cardholder’s Reallocation and Reconciliation of Statement” section of the P-Card Policy & Procedures Manual for both years include the following:
Upon completion of reconciliation, the cardholder shall staple the supporting documentation to the cardholder statement and send to their Supervisor/Approver. . . .
The supervisor must sign the statement as an indication of review/approval.
Regarding travel expenditures, both years’ editions of the P-Card Policy & Procedures Manual state that an employee must submit a Travel Authorization Form before traveling.
Regarding food expenses, the fiscal year 2019 P-Card Policy & Procedures Manual states that obtaining “prior approval of the expenditure through normal administrative channels” is a recordkeeping requirement. The fiscal year 2020 P-Card Policy & Procedures Manual states, “All food purchases must have prior approval from the Vice President of Administration & Finance.”
Reasons for Noncompliance
Although P-Card policies and procedures have been developed and approved, NECC personnel who were responsible for review and approval of P-Card expenditures have not enforced them.
Recommendations
- NECC should ensure that all required supporting documentation for P-Card expenditures is provided.
- NECC should enforce its P-Card policies and procedures.
Auditee’s Response
In response to providing NECC employees and [its Finance Department] with a better overall control environment, the college switched banks January 1, 2021 to US Bank. We had realized the need for our bank provider to have an enhanced internal control structure [related to] the approval and system documentation capabilities. Additionally, to reduce risk to the college we took an aggressive approach in reducing the number of college P-cards, we had reduced issued P-Cards by 22 or 28%.
We would like to add that the 100 sampled P-Card expenditures were appropriate expenditures. We realize an opportunity exists to improve required supporting documentation.
We agree with the above 2 recommendations. US Bank’s internal control structure and related reporting mechanisms are enhancing the college’s ability to manage the P-Card processes. All required documentation is attached to the transaction electronically. This ensures that approvers and [NECC’s Finance Department] can view documentation in real time and identify any documentation that is missing. Additionally, we are in the processing of updating the college’s P-card policies, including travel and food policies.
Auditor’s Reply
Based on its response, NECC is taking measures to address our concerns on this matter.
Date published: | June 30, 2021 |
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