Lots of state purchasing card activity lacks full documentation, audit concludes

CHARLESTON, W.Va. — The Legislative Auditor says a significant percentage of activity on state purchasing cards isn’t being done as it should.

An audit presented to lawmakers on Tuesday showed that significant percentages of purchasing card activity did not have sufficient supporting documentation.

Some purchases just shouldn’t have been allowed on the cards, the audit concluded.

The Legislative Auditor didn’t exactly sound an alarm over the use of purchasing cards in state government but did warn that improved documentation efforts may be necessary.

“While the results of these analyses confirm that the minor documentation issues identified in past legislative audits exist statewide, the Legislative Auditor concludes that the system of controls over the P-card Program is largely adequate so as to provide reasonable assurance that P-Card usage is appropriate,” the audit stated.

To reach its conclusions, the Legislative Auditor analyzed two statistically-significant random samples of P-card transactions from the first quarter of fiscal year 2017.

There were 126,166 total purchasing card transactions during that period.

But the audit looked at a sliver of those to get a good feel for the overall picture.

The first sample was 656 transactions at non-higher education agencies, and the other consisted of 665 transactions from higher education institutions.

Of all those, 17.4 percent — or 230 — did not have sufficient supporting documentation.

There were several reasons for that conclusion.

Thirty-two of those lacked an itemized receipt.

More — 194 — didn’t have documentation showing that the receipt was for a justified business purpose.

“In concluding that these transactions did not have documentation to show that the purchases were for business purposes, the legislative auditor is not suggesting that all 194 transactions were inappropriate or for personal use,” the audit stated.

“Rather, the Legislative Auditor concludes that P-card users need to do a better job of clearly documenting that each P-card transaction is for the official business and benefit of the state.”

And 25 lacked appropriate documentation related to hospitality services.

About 2 percent of transactions were determined by the Legislative Auditor to not be allowable at all. Many of those were made with third-party payment processors such as PayPal or Amazon Marketplace.

“The Legislative Auditor found no documentation to indicate that prior approval was sought or obtained,” the audit stated.

The Legislative Auditor extrapolated its findings to project what might be the situation across all state purchasing card activity.

The audit concluded that more than 24,000 purchasing card transactions from the first quarter of 2017 — the period that was studied — may have been processed for payment while missing important pieces of required information such as itemized receipts or a clear business justification.

Furthermore, the projections indicate that more than 2,000 unallowable P-card purchases may have been processed for payment.

“The higher the volume of transactions and the higher the number of active P-cards available, the higher the inherent risk of fraud, misuse or abuse,” the audit stated.

“However, it is the opinion of the Legislative Auditor that to the extent to which these transactions occur, they are the result of individual bad actors and do not reflect systemic issues with the P-card program or its system of controls.”





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