Whistleblower: Tallahassee City Employees Misusing P-Cards

December 19, 2017

The auditor for the city of Tallahassee has decided to roll a complaint from a whistleblower into the audit of the city’s purchasing card (P-Card) program after the Ethics Board Officer received a call on the city’s ethics hotline.

The caller alleged that the P-Cards belonging to the Florida city were being used improperly and that supervisors were concealing the misuse.

City Auditor Bert Fletcher, who has been with the city for 18 years, said that the city has audited the program twice during his tenure and that the last unique audit of the P-Card program was completed several years ago. Consequently, the audit could take several months, he warned.

Common industry occurrence

Allegations of and proven impropriety is fairly common in P-Card programs.

Even programs that are reviewed more regularly can struggle with violations. Take the Environmental Protection Agency’s (EPA’s) P-Card program where a recent investigation of 18 transactions found a number of violations including:

  • None of the 18 transactions reviewed complied with any of the 14 internal controls tested
  • Two transactions, totaling $14,985, were for fitness memberships improperly paid for in advance
  • The EPA intended to block high-risk Merchant Category Codes (MCC) that would cause the transactions to be declined, but this internal control failed

This is not the first time that the EPA’s P-Card program has encountered problems.

In a 2014 report called Ineffective Oversight of Purchase Cards Results in Inappropriate Purchases at EPA (Report No. 14-P-0128), it stated that the “EPA did not provide effective oversight to ensure that purchase card holders and approving officials comply with internal control procedures. Of $152,602 in sampled transactions, $79,254 was for prohibited, improper and erroneous purchases.”

Two main reasons for non-compliance

As demonstrated by these two examples, lack of proper reviews and oversight can lead to the appearance of or actual misuse and abuse. To make matters worse, according to a recent presentation I attended at the AP P2P conference, “when T&E (travel and entertainment) fraud is discovered, even if they’re minor violations, 75 percent of the time those same individuals are committing other fraud or misusing company assets as well.”

So how do you combat misuse, abuse and fraud?

As I discovered from the conference, there are many strategies including defining clear policies, implementing the same rules for all employees, training new and heavy users on policies regularly, and (frequent) random audits.

For Pacific Gas and Electric, they also implemented a continuous improvement system where they extracted data from their ERP system and created rules-based notifications for any instances of non-compliance. Benefits of their automation project and continuous review include

  • Reduced manual work
  • Processes are consistent and outcomes easier to measure
  • Staff are now more focused on challenging and interesting work
  • Improved bottom line

Are you looking to improve the oversight in your P-Card program? Download our analytics guide on how to avoid abuse, misuse and fraud in your T&E and P-Card programs now.

About Anu Sood 

Anu Sood (LinkedIn | Twitter) is the Director Marketing at CaseWare RCM and is responsible for the company’s global marketing strategy. She has over 20 years of experience in product development, product management, product marketing, corporate communications, demand generation, content marketing and strategic marketing in high-tech industries.

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