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NECC Did Not Always Obtain Required Documentation, Including Approvals, for Procurement Card Expenditures.

Without proper approvals and adequate supporting documentation NECC cannot ensure that purchases are for the college’s benefit.

Table of Contents

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

  1. NECC should ensure that all required supporting documentation for P-Card expenditures is provided.
  2. 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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