Overview
The University of Massachusetts (UMass) Chan Medical School’s (Chan’s) bank card transactions did not always comply with UMass system policies and standards. We inspected 128 bank card transactions made during the audit period, totaling $281,771, and found that some transactions were missing some or all supporting documents. There were also instances where cardholders did not perform monthly bank statement reconciliations, either in a timely manner or at all. The following are details from our findings regarding these transactions:
- Regarding travel-related documentation, 9 transactions out of our sample of 128 required a travel authorization number because they were related to out-of-state travel. However, 6 out-of-state travel-related transactions out of these 9 were missing a travel authorization number on either the bank statement, the receipt, or both.
- Regarding monthly reconciliations, note that the 128 transactions within our sample were filed in a total of 127 requisitions.
- Of the 127 requisitions related to our sample of transactions, 2 requisitions were never created in the UMass system’s online bank card transaction repository, while 42 were submitted after the allowable 30 days. The median number of days past due for these 42 requisitions was 22.5 days.
- Regarding signatures needed for requisitions, 1 requisition out of 127 was missing a supervisor’s approval signature.
If UMass Chan does not reconcile and upload bank statements and supporting documents to the UMass system’s online bank card transaction repository in a timely manner or at all, then UMass Chan assumes a higher-than-acceptable risk of erroneous and potentially fraudulent bank card activity. In addition, having incomplete documentation for bank card transactions on reconciliations results in a lack of transparency.
Authoritative Guidance
UMass Chan’s cardholders are responsible for making allowable purchases, maintaining proper documentation, and completing timely reconciliations, according to Sections 2, 4, 15, and 21 of the UMass Bank Card Use Standard. This standard states,
2. HOW IT WORKS. . . .
Purchases are charged to the cardholder’s department and each cardholder is responsible for downloading, reviewing, reconciling, and submitting their monthly statement to their supervisor for approval and signature within 30 days of the statement issue date. . . .
4. CARDHOLDER RESPONSIBLITIES. . . .
Cardholders are responsible for submitting all required receipts for all UMass Bank Card purchases. These receipts are to be submitted with the cardholder’s monthly reconciliation and will be subject to review and audit. . . .
If a receipt is lost, the cardholder must make every possible attempt to contact the vendor and obtain a copy. If a copy cannot be obtained, a Missing Receipt Form may be filled out as the absolute last resort. . . .
15. RECORD KEEPING. . . .
All card statements are required to be signed by the cardholder and their supervisor. . . .
Monthly statements and all required supporting documentation shall be submitted using the [the UMass system’s Online Bank Card Transaction Repository] form. . . .
21. TRAVEL RELATED INFORMATION. . . .
1. If the travel required prior authorization (see UMass Business and Travel Policy), then travel authorization number must be referenced on the bank card statement and receipt.
2. Receipts—Original receipts for UMass Bank Card transactions must be submitted with the UMass Bank Card Bank Statement. The only exception to this is for individual receipts under $25.00 while on travel status (Parking, Tolls, Taxi, etc. . . .). In order to capture all relevant information associated with a trip, UMass Bank Card users must also scan and attach the UMass Bank Card receipts to the online expense report along with any receipts for reimbursable expenses. In addition, hotel bills, airfare or any other UMass Bank Card charges related to the trip must be entered on the expense report. “Paid via ProCard” must be selected for payment type and “UMass Bank Card” must be selected for billing type. In circumstances where a traveler is inadvertently reimbursed on a UMass Bank Card receipt, the reimbursement must be returned to the University within 30 days of discovering the error.
Reasons for Issue
Regarding missing travel-related information, UMass Chan management stated that the missing travel authorization number on the bank statement and receipt(s) was an oversight.
Regarding the 2 requisitions that were never created and the 42 that were submitted late, UMass Chan management told us that this was an oversight. UMass Chan management said that it was unclear whether it was because someone assumed that it had already been uploaded or simply forgot to do so. They were uncertain about the exact reason(s) behind the failure to upload the documentation.
Regarding the requisition that was missing a supervisor’s approval signature, UMass system officials acknowledged that this requisition was routed incorrectly; however, they could not explain why.
Recommendations
- UMass Chan should ensure that travel authorization numbers are referenced on bank statements and receipts. If this is not feasible within the requirements of the current standard, then the UMass system should update the UMass Bank Card Use Standard to reflect appropriate and feasible requirements.
- UMass Chan should ensure that cardholders reconcile and upload all bank statements and supporting documents into the UMass system’s online bank card transaction repository within 30 days of bank statement dates.
Auditee’s Response
All nine travel authorizations cited were filed and approved, and all the travel authorization numbers were recorded in the finance system along with trip related bank card transactions. As part of its ongoing efforts to innovate and improve efficiency and effectiveness of its operations, UMass has implemented a new University-wide expense system that captures travel-related information, including, but not limited to, expenses, receipts and travel authorizations. As a result, the Bank Card Standard is being updated to reflect the new protocols.
The two cited reconciliations were manually approved and supporting documentation was maintained outside of the repository and provided to the auditors.
Furthermore, the new expense system improves the bank card reconciliation process and allows for a streamlined and automated process where bank card transactions are imported and available daily for review. The new expense system includes monitoring controls to prompt timely review. As a result, the University no longer utilizes the online repository, and the Bank Card Standard is being updated to reflect new protocols.
Auditor’s Reply
We acknowledge that the travel authorization numbers from our sample were recorded in the finance system instead of on the bank statements and receipts. However, referencing the travel authorization number on the bank statements and receipts is required by the UMass Bank Card Use Standard. If the expectation is for staff members to record travel authorization numbers in the finance system, rather than on bank statements and receipts, then the UMass Bank Card Use Standard should be updated to reflect this. The UMass Bank Card Use Standard was updated once during the audit period (on September 20, 2022) and then again after the audit period (on June 1, 2023), and it still requires that travel authorization numbers be referenced on bank statements and receipts.
We also acknowledge that the two reconciliations referenced above were manually approved and that the corresponding supporting documentation provided to us was maintained outside of the UMass system’s online bank card transaction repository. However, according to Section 15 (Record Keeping) of the UMass Bank Card Use Standard, this supporting documentation should have been submitted using the UMass system’s online bank card transaction repository. Additionally, because this supporting documentation was maintained outside of the online bank card transaction repository, we were unable to determine the timeliness of the workflow for these two reconciliations.
We commend the UMass system for planning to update the UMass Bank Card Use Standard for all UMass campuses and for implementing a new expense system for all UMass campuses. However, while these changes will be made at the central level, the weaknesses referenced in this audit occurred on an individual-campus level. Therefore, the updates may not resolve these issues, as they must be addressed, in this instance, by UMass Chan itself. We strongly encourage UMass Chan to fully implement our recommendations regarding these matters.
| Date published: | September 6, 2024 |
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