City of Cape Coral City Auditor s Office

Transcription

1 City of Cape Coral City Auditor s Office TO: Mayor and Council Members THRU: Dona J. Newman, City Auditor FROM: Kathy Magaw, Assistant City Auditor DATE: February 18, 2009 SUBJECT: The Procurement Card Program was initiated as a pilot program in the Public Works Department, Facilities Management Division. The Financial Services Director expressed a desire for assurance that appropriate controls were in place before extending the program throughout the City. The City Auditor s Office performed a review of the program. This review focused on the procurement card processes from inception on July 15, 2008, to September 30, Attached is the report of the conducted by the City Auditor s Office. Management responses are included with the findings and recommendations. The City Auditor s Office would like to thank the Financial Services and Public Works Directors, and staff for their assistance in performing this audit and addressing the issues. If there are further questions or concerns regarding this report, please contact the City Auditor s Office. Attachments xc: Terry Stewart, City Manager Carl Schwing, Assistant City Manager Mark Mason, Financial Services Director Chuck Pavlos, Public Works Director Dolores Menendez, City Attorney Bonnie Potter, City Clerk Mark Thiele, Procurement Manager P O Box Nicholas Pkwy. Cape Coral, FL Phone Fax

2 City of Cape Coral Office of the City Auditor Report Date: February 18, 2009

3 Executive Summary On February 11, 2008, the City Council authorized the implementation of a Procurement Card (P-card) Program for the purpose of reducing paperwork and creating efficiencies in the procurement process for normal, recurring small purchases. The program was initiated as a pilot program in the Public Works Department, Facilities Management Division. The Financial Services Director expressed a desire for assurance that appropriate controls were in place before extending the program throughout the City. Our audit work included a review of the procurement card policy and process from the program s inception (July 15, 2008) through September 30, While we found a few areas to suggest improvements in, assurance can be given that the P-card Program has sufficient controls and processes in place to implement the program in other departments in the City of Cape Coral. We commend the Procurement and Facilities Management staff for their immediate implementation of recommendations during the course of the audit. Page 1 of 4

4 Background Our purpose in performing this audit engagement was to provide assurance to Management and to City Council that the new P-card Program had a good system of controls prior to implementation in other departments. The Financial Services Department was piloting the program at the Facility Maintenance Division of the Public Works Department. The City Auditor s Office conducted this audit by request of the Financial Services Department prior to implementing the program throughout the City. Scope Our audit work included a review of the procurement card processes from inception on July 15, 2008, to September 30, The focus of this audit was on P-card use by the Facility Maintenance Division of the Public Works Department as it was selected by the Financial Services Department as the first area for the pilot program. Audit Objectives and Conclusions Objective: Provide assurance to Council and Management the Procurement Card Program achieves the objectives presented. We found that some of the program s stated objectives have been met and the rest are on track for future achievement. Objectives that have been met were: Reduce paperwork Reduce purchasing cycle time Focus purchasing staff on value added activities No service fee The objectives that are yet to be met were: Annual pay-back of $75,000 Increase productivity Reduce total cost of acquisition At the time of our audit work, the P-card Program was still in the pilot program stage. The Procurement Manager was implementing the new program and training staff in the Procurement, Accounts Payable, and Facilities Management Division. As the program is extended throughout the City, the Financial Services Department expects the City will meet the remaining objectives. Page 2 of 4

5 Objective: Ensure there are effective guidelines, policies and procedures and they are implemented and adhered to: In general, the policies and procedures seem sufficient to reasonably control the City s P-card Program. They were well documented and compared favorably with other agencies P-card policies. We found a couple of areas where small improvements could be made. Finding #1: We reviewed the P-card Policies and Procedures Manual (Manual) and interviewed participants and found the Facilities Management Manager did not have the latest revision of the Manual. This indicated a weakness in the change management process for the P-card Program policies and procedures. Recommendation 1: We recommend Management establish a procedure to ensure all users receive policy and procedure updates. Management Response #1 Implemented being placed on Intranet SharePoint. Finding #2: We conducted interviews to gain an understanding of the role individuals had and compared them to what the Manual stated. We discovered a discrepancy between the proscribed procedures in the Manual and the actual practice. In addition we found the forms required by the policy stated in the Manual had not been utilized. Recommendation 2: We recommend aligning the policy and the practice to which ever is more efficient without sacrificing control of the process and updating the Manual if necessary. During this audit engagement, the Procurement Manager took immediate action and revised the Manual to indicate the forms were for optional use. Management Response #2 Clarified CAB & Cardholder roles; noted on forms which ones are optional. Objective: Verify cardholders are making authorized purchases and properly accounting for all items received/used: Overall, the testing of the P-card transactions were processed in accordance with the City s policies; however controls in the documentation process could be improved. Finding #3: A Facilities Management Division rule was established that any purchase over $75.00 must be approved prior to purchase. We found that there was no documentation indicating the advance authorization was given. Recommendation 3: We recommend that all required approvals be documented. During this audit engagement, the Facilities Division Manager took immediate action by requiring documentation indicating the advance authorization was given. Management Response #3 Implemented. Page 3 of 4

6 Finding #4: The back of the procurement card is imprinted with the statement: not valid unless signed. We found cases where the cardholder signature was missing on the back of the procurement card. Recommendation 4: We recommend the cardholder be required to immediately sign the back of the card. This policy should be included in the manual and reinforced in the mandatory training sessions. During this audit engagement, the Procurement Manager took immediate action and revised the Manual to indicate the cardholder signature was required on the back of each card. Management Response #4 Implemented. Finding #5: The policy requires signature of the Cardholder, Certified Agency Buyer, and Division Manager on reconciled statements. We found instances where some signatures required by the policy were not present. Recommendation 5: We recommend that the policy be enforced. Management Response #5 Implemented having CAB & Division Managers sign reconciled statements; Cardholders sign receipts. Finding #6: The Manual required the Cardholder to run the Department/Division Weekly Transaction Report. During this audit engagement we found that the Certified Agency Buyer (CAB) produced the report. Recommendation 6: We recommend aligning the procedure and the practice to whichever is the most efficient without sacrificing control of the process and updating the Manual if necessary. The Procurement Manager took immediate action and revised the Manual to indicate the CAB rather than the Cardholder should produce this report. Management Response #6 Corrected Procedures to show CAB producing the Report. Conclusion Overall the P-card Program seems to be well controlled and meeting stated objectives. We commend the Procurement and Facilities Management staff for their immediate implementation of recommendations during the course of the audit. Page 4 of 4