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Information Technology Procurement Card Audit

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4 pages
Information Technology Procurement (Credit) Card Audit May 2008 “promoting an efficient & effective school division” Executive Summary Our review of Information Technology (IT) procurement (credit) cards revealed that internal controls appeared adequate. In general, expenditures appeared reasonable, properly approved, and supported by appropriate documentation. In addition, the procurement (credit) cards appeared to be in compliance with Regulation 5350.2 Finance Office Procurement (credit) Card Management for Appropriate Funds (effective 06-16-03). Areas where controls could be strengthened are: • Credit card forms should be consistently completed • Card duties should be properly segregated All issues have been addressed and corrected by area management prior to the release of this report. Background The purpose of the Fairfax County Public Schools’ (FCPS) procurement (credit) card program is to provide an efficient, reliable method of procurement to acquire needed goods and services in a timely and efficient manner. While the use of a procurement card can simplify and expedite procurement, its use requires strict adherence to internal control procedures and a commitment to accompanying accounting procedures. In most cases, card use reduces staff procurement efforts and shortens delivery time; however, it increases the need for financial tracking and control efforts. The Office of Finance, Accounting Section, is ...
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Information Technology
Procurement (Credit) Card Audit
May 2008
“promoting an efficient & effective school division”
Information Technology
Procurement (Credit) Card Audit
1
Executive Summary
Our review of Information Technology (IT) procurement (credit) cards revealed that internal
controls appeared adequate.
In general, expenditures appeared reasonable, properly
approved, and supported by appropriate documentation.
In addition, the procurement
(credit) cards appeared to be in compliance with Regulation 5350.2 Finance Office
Procurement (credit) Card Management for Appropriate Funds (effective 06-16-03).
Areas
where controls could be strengthened are:
Credit card forms should be consistently completed
Card duties should be properly segregated
All issues have been addressed and corrected by area management prior to the release of
this report.
Background
The purpose of the Fairfax County Public Schools’ (FCPS) procurement (credit) card
program is to provide an efficient, reliable method of procurement to acquire needed goods
and services in a timely and efficient manner.
While the use of a procurement card can
simplify and expedite procurement, its use requires strict adherence to internal control
procedures and a commitment to accompanying accounting procedures.
In most cases,
card use reduces staff procurement efforts and shortens delivery time; however, it
increases the need for financial tracking and control efforts.
The Office of Finance, Accounting Section, is responsible for administering the
procurement card program.
These responsibilities include approval of card application,
assisting departments with dispute resolution, monitoring monthly reconciliations, and
reviewing and remitting payment for the consolidated bill.
Procedures governing the use of
procurement cards are provided by the card service vendor in conjunction with FCPS
Regulation 5350.2.
Scope and Objectives
This audit was performed as part of the fiscal year 2008 Annual Audit Plan. The audit
covered the period from October 1, 2006 through September 30, 2007 and was conducted
in accordance with generally accepted governmental auditing standards. Our audit
objectives were to determine that:
Procurement cards were being used in accordance with regulation 5350.2
Adequate control procedures have been implemented and are being followed
Monthly reconciliations are being performed and submitted in accordance with
regulations
Information Technology
Procurement (Credit) Card Audit
2
For the period under review, Information Technology managed 21 credit cards that were
used for 1,105 appropriated fund expenditures.
A total of 180 transactions were reviewed
during the period.
The sample included 150 randomly selected and 30 judgmentally
selected transactions which represented 18% of the total card expenditures.
Methodology
Audit methodology included a review and analysis of internal control procedures over card
expenditures and related documentation.
Our audit approach included an examination of
expenditures, records maintained in the department, monthly reconciliations, interviews
with appropriate employees, and a review of applicable regulations and procedures.
We
evaluated the processes for compliance with FCPS Regulation 5350.2
.
Information was
extracted from PathwayNet for sampling and verification to source documentation during
the audit; however, our audit did not include an independent review of system controls.
Our transaction testing did not rely on system controls; therefore, this was not a scope
limitation.
The FCPS Office of Internal Audit is free from organizational impairments to independence
in our reporting as defined by generally accepted government auditing standards.
We are
organizationally part of the Office of the Superintendent and report directly to the Audit
Committee.
Organizationally, we are outside the staff or line management function of the
units that we audit.
We report the results of our audits to the management of the
department under review, the appropriate leadership team member, the Superintendent,
and the Audit Committee, and reports are available to the public.
Findings, Recommendations, and Management Response
1. Procurement credit card form not properly completed
During the audit period, Information Technology used a department created credit card
form instead of a credit card log.
In addition to having all information related to the
transaction listed on the form, the form also had a space for approval.
Of the 180
transactions reviewed, 21 transactions had incomplete credit card forms.
Recommendation:
While the credit card form appeared to be an adequate control in
lieu of a credit card log, Information Technology should properly record all transaction
information, including evidence of approval, on the form for all transactions.
Management Response:
All locations are now using the form we created to document
credit card purchases.
They are logging them as well.
We are receiving copies of both
the form and log for out records on a weekly basis.
Note:
The Office of Internal Audit has verified the use of the log and credit card form.
Further follow up is not required for this item.
Information Technology
Procurement (Credit) Card Audit
3
2.
Lack of separation of duties
There was a lack of separation of duties for one of the cards reviewed.
For this
card, one Individual was responsible for purchasing items, approving orders, and
reconciling the credit card statements. Generally accepted accounting principles
recommend the separation of duties in performing certain tasks such as the
collection of funds from the recording and reconciliation of the funds collected so that
no one person has control over all parts of a transaction..
Recommendation:
The task of reconciling the credit card statement should be
assigned to an individual for a detailed review separate from the individual
responsible for making or approving purchases made with the credit card.
Management Response:
We have implemented the practice that the individual
placing the order is not the person reconciling the credit card statement.
This was
true in our telephone accounts.
One individual will place the order and another will
reconcile.
Note:
The Office of Internal Audit have verified the separation of duties and no
further follow up is required for this item.