NSW Audit Office - Financial Reports - 2005 - Volume 5 - Compliance Review Use of Credit Cards

NSW Audit Office - Financial Reports - 2005 - Volume 5 - Compliance Review Use of Credit Cards

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Compliance Review of the Use of Credit Cards The corporate credit card was introduced in the NSW Public Sector in 1987 to be used for official travel. This was extended to the purchase of goods and services in 1988 as it was deemed to be a more efficient method of purchasing large volume, low value and low risk purchases. Since 1999, CEOs of Budget agencies must attest to the Minister, as part of their performance review, that credit card use accords with government policy. These agencies must include this statement in their annual report. We reviewed the policy and practices of 10 agencies to verify compliance with the Treasurer’s Directions. CONCLUSION Our findings suggest that there has been a deterioration in the application of controls over credit card usage since our last review in 2001. Further, a significant number of agency heads did not provide the required certification to their Minister regarding credit card usage. KEY FINDINGS In two of the 10 agencies we reviewed, credit card expenditure was sometimes being incurred prior to approval. In three agencies properly certified documentation was not always available to substantiate credit card purchases nor was the alternative procedure (of providing a signed declaration) followed. Furthermore, in two of those same agencies there were several instances where the credit card statements had not been signed by the card holder (to confirm expenditure) nor by another official (as ...

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Compliance Review of the Use of Credit Cards
The corporate credit card was introduced in the NSW Public Sector in 1987 to be used for official travel. Thiswas extended to the purchase of goods and services in 1988 as it was deemed to be a more efficient method of purchasing large volume, low value and low risk purchases.
Since 1999, CEOs of Budget agencies must attest to the Minister, as part of their performance review, that credit card use accords with government policy.These agencies must include this statement in their annual report.
We reviewed the policy and practices of 10 agencies to verify compliance with the Treasurer’s Directions.
CONCLUSION Our findings suggest that there has been a deterioration in the application of controls over credit card usage since our last review in 2001. Further, a significant number of agency heads did not provide the required certification to their Minister regarding credit card usage.
KEY FINDINGS In two of the 10 agencies we reviewed, credit card expenditure was sometimes being incurred prior to approval. In three agencies properly certified documentation was not always available to substantiate credit card purchases nor was the alternative procedure (of providing a signed declaration) followed. Furthermore, in two of those same agencies there were several instances where the credit card statements had not been signed by the card holder (to confirm expenditure) nor by another official (as independent authorisation). Four agency heads did not provide certification to their Minister that credit card expenditure was in order.
RECOMMENDATIONS
We recommend that: Treasury remind agency heads of the requirement to satisfy themselves that credit card expenditure is in order and to certify that fact to their Minister agencies should reinforce with staff the need to obtain approval prior to spending and to retain supporting documentation for all purchases.
Auditor-General’s Report to Parliament 2005 Volume Five
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Compliance Review of the Use of Credit Cards
DETAILED FINDINGS Department of Ageing, Disability and Home Care Credit card limits were not regularly reviewed. One credit card had a limit in excess of the agency’s policy and in a number of other cases regular expenditure was well below the credit card limit. Properly certified transaction dockets were not always available to substantiate purchases, nor were there signed statements to the effect that all expenditure was of a business nature. Most of the credit card monthly statements reviewed by us had not been signed by an authorising officer. Home Care Service of NSW Properly certified transaction dockets were not always provided to substantiate purchases, nor were there signed statements to the effect that all expenditure is of a business nature. Sydney Cricket Ground and Sports Ground Trust Properly certified transaction dockets were not always provided to substantiate purchases, nor were there signed statements to the effect that all expenditure is of a business nature. There were instances where the monthly credit card statement had not been signed by an authorising officer. The Trust’s policy does not provide for the Chief Executive Officer’s use of credit cards to be reviewed. We suggest that it would be good practice for details of his credit card usage to be included with reports provided to the Trustees.
BACKGROUND In 1997, we released a performance audit report on credit cards. The audit addressed the existence and adequacy of policies/guidelines and the quality of internal controls. The report covered six agencies. In the following year a review was conducted in 136 agencies on compliance with Treasurer’s Directions or the agency’s own policy on credit card usage. Both reviews found that: some credit spending by NSW agencies was questionable some purchases were made without documented prior approval some agencies did not maintain a register of credit cards individual credit limits were not based on expected use. A follow-up compliance review was carried out in 2001. The review found that agencies had improved their compliance with credit card policies, however there were still two critical aspects of non-compliance: CEOs were not certifying to their Minister that credit card use accords with the Treasurer’s Directions as required by the Premier’s Memorandum on Performance Agreement Guidelines (M99-05) Card holders had not signed their statement of responsibilities.
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Auditor-General’s Report to Parliament 2005 Volume Five
Compliance Review of the Use of Credit Cards
The purpose of this compliance review is to ensure that agencies are complying with the provisions of Treasurer’s Direction 205.01-205.08, “Payment of Expenses by Credit Card”. Treasurer’s Directions only apply to those organisations that are listed in Schedules 2 and 3 of thePublic Finance and Audit Act 1983. Agencies that are not required to follow the directions should have developed their own policy for credit card use.
We decided to again review how well agencies are complying with policy. We did this in the following agencies:
Art Gallery Trust Department of Ageing, Disability and Home Care Department of Corrective Services Home Care Service of NSW Ministry for the Arts
TREASURY RESPONSE
Roads and Traffic Authority Sydney Cricket Ground and Sports Ground Trust Sydney Olympic Park Authority Sydney Opera House Trust WorkCover Authority
In August 2005, Treasury issued “Credit Card Use Best Practice Guide” (TPP 05-01) which sets out agency responsibilities for certification and approval. Treasury conducts credit card compliance surveys every six months which must be certified by agencies’ chief financial officers.
Agency heads will be reminded of the requirement to satisfy themselves that credit card expenditure is in order and to certify that fact to their Minister.
Auditor-General’s Report to Parliament 2005 Volume Five
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