Procard User Guide   Edition 1 - Chapter 4

POST AUDIT/OVERSIGHT:

Post Audit Policies/Procedures

NOTE:

Following is Chapter 4, POST AUDIT/OVERSIGHT, of the Procard User Guide. There are five chapters in all. The link to the online User Guide is provided to all prospective cardholders at training. If you are interested in finding out more about this exciting and innovative purchase card program, please contact the Procard Manager in the Procurement Department at 5-1748.

It is the responsibility of the University to monitor Procard usage, to insure that Cardholders are in compliance with the policies and procedures outlined in the User Guide and that Procard records are maintained by user departments in accordance with the procedures outlined in Chapter 2, Procard Records Management. To this end, Cardholder records will be reviewed on a periodic basis by staff from the Controller’s Office (Post Audit Review Team), to check for adherence to internal controls and to the policies and procedures outlined in the Guide. Cardholder records are also subject to review by various other internal and external auditors. All transactions are available daily for monitoring non-compliance.

A member of the Post Audit Review Team (hereinafter referred to as "PART") will inform the Departmental Records Manager and the Cardholder of any pending post audit review to be conducted by the PART. Post audits may be conducted by a member of the PART, or by an internal or external (state, federal, private) audit firm. Departmental Records Managers and Cardholders will make themselves available to respond to any post audit questions or concerns. Routine post audits performed by the PART will be done on an appointment basis on an agreed to date and time. The PART reserves the right to require that the audit records be made available to a PART member within 14 calendar days of the original request for such a routine appointment, or immediately, upon request, should it be deemed necessary by the PART. Post audits performed by the University’s internal auditors, or by an external audit firm, will be performed with up to 24 hours advance notice. It is imperative that Cardholder records be kept up to date at all times.

Please see the Post Audit Checklist, pages 35-37, for the list of issues that will be addressed during a post audit review by the PART. The University’s internal auditors, who report to the President’s Office, in conjunction with Peat Marwick, an external audit firm, created this list. The PART member will use the checklist when (s)he reviews the Cardholder’s file to insure that the Cardholder and Records Manager are in compliance with Procard policy.

Instances of non-compliance are called "findings." In most cases, the Cardholder or the Records Manager, depending on where the finding lies, will be required to provide the auditor with a written explanation for the finding, or to take whatever steps are necessary to correct the finding.

The Procard Explanation/Justification Affidavit will be completed by the Cardholder to explain/justify any instance of non-compliance with Procard policy when requested by a member of the PART. The form may be viewed on page 58(f). Cardholders/Records Managers will be given a reasonable amount of time to respond to any findings that might be documented against a Procard by a member of the PART.

The members of the University’s PART are authorized and sanctioned by University Administration to conduct post audit reviews, to explain and interpret Procard policy, to request appropriate documentation for any post audit finding, and to make recommendations to University Administration for possible action to be taken against the Cardholder’s Procard for instances of non-compliance. The University’s PART staff are not adversaries. They are there to assist Cardholders and Records Managers, to insure that Cardholders/Records Managers have a clear understanding of Procard policy and that adequate records are maintained, so that when they are visited by other auditors, there will be no findings.

Findings against the Procard by an outside audit firm could seriously jeopardize not only the privilege of the employee to have a Procard, but also the University’s entire Procard Program. Please remember that this is a public institution, funded, in part, by the taxpayers. As such, we are subject to the scrutiny of all types of audits, as well as the press. This is not a lecture, just an explanation of why we must be so careful.

Oversight Policies/Procedures

How Procard Oversight Works - Overview:

Non-Compliance with Procard policy may result in a reduction in the Cardholder’s transaction limits or in the cancellation of the Procard. For the complete list of review issues, see the Post Audit Checklist, pages 35-37. Examples of issues of non-compliance follow:

• Use of the Procard for the purchase of restricted commodities;
• Use of the Procard for the purchase of items that are available on University, State, or MHEC Contract from a vendor other than an appropriate contract vendor;
• Use of the Procard by an unauthorized individual (someone other than the "official" Cardholder);
• Use of the Procard in excess of assigned Cardholder limits or available budget, after the expiration date of a grant or contract account, or for purchase(s) that are inappropriate for the account/object code charged;
• Failure to comply with the procedures outlined in Chapter 2, Procard Records Management, as outlined in the Guide.

In extreme cases (instances where it is proven that fraud has occurred, or that the Cardholder has used the card for personal purchases that do not benefit the University), disciplinary action, and, possibly, legal action, up to and including termination of employment and the repayment to the University of any improper charges, may be required, based upon an extensive investigation by University Administration and any other parties that are deemed appropriate. Suspected instances of fraud will be turned over to the University’s Internal Auditors immediately for their review and possible action.

Should a Cardholder disagree with an audit finding made by the PART, the Cardholder may write to the Associate Controller, Goodell Building, to dispute the finding. The Cardholder should include a photocopy of the Post Audit Checklist that was provided by the PART to the Cardholder with the finding, and a complete and clear written explanation of the Cardholder’s reason for the dispute. The next level of dispute would be to the Vice Chancellor for Administration and Finance.

Following is an overview of how oversight of the Procard works:

1. The PART will review the Cardholder/Records Manager’s Procard files against the Post Audit Checklist, pages 35-37), on a periodic basis.

2. The Team will revisit Cardholders/Records Managers whose purchase transactions/records do not comply with Procard policy periodically until the Team is satisfied that the instances of non-compliance have been rectified.

3. The Cardholder/Records Manager will be required by the Team to complete the Procard Explanation/Justification Affidavit for certain instances of non-compliance; for example, purchasing from the restricted list, dovetailing, using a non-contract vendor when a contract is available etc. The explanation and instructions for the use of the Procard Explanation/Justification Affidavit form are contained on the back of that form.

4. Action may be taken against the Cardholder’s Procard (reduction in spending/transaction limits, or cancellation of card), depending on the severity of the instance(s) of non-compliance and the Cardholder’s history of non-compliance with Procard policy, if any. Said action may be taken by the Associate Controller/Director of Procurement, or by the dean, director, account administrator, or the reporting authority.

5. Cardholders/Records Managers/Account Administrators/Reporting Authorities, as may be appropriate, will be kept informed of audit results and of any action that might be taken against a Procard as a result of non-compliance with policy. The procedures are detailed in the Post Audit Review Flows for Issues of Non-Compliance to Procard Policy, pages 38-40.

6. The flows outlined in the charts reflect worse case scenarios. The PART will work with Cardholders/Records Managers, to insure that they have a clear understanding of policy, and to help them to rectify and correct findings, in order to avoid any action against the Cardholder’s Procard.

7. Questions may be directed to the Manager of Accounts Payable, Controller’s Office, at 5-4710, or to the Procard Manager at 5-1748.

  

Cardholder’s Name:
Cardholder’s Department:
Period Reviewed:	From:		To:
Date(s) of Audit:	From:		To:
Reviewed by (Post Audit Review Team Member(s):
Account Charged – Name & Number:
Type of Account Charged (Grant, Trust University:
Purchase Description:
Purchase Amount:
Transaction to be Tested:
Audit Task	Yes	No	Comments
Departmental Procedures
Are records being maintained in accordance with the Procard Record Keeping System requirements? (Refer to Procard User Guide, Chapter 2.)
a. Locked filing cabinet, separate drawer?
Are the monthly statements in the file?
Has the most recent Cardholder’s statement been reconciled and turned in to the Records manager by the 15th of the month following the statement date?
Cardholder Procedures (perform for every third item selected)
3. Are records being maintained in accordance with the Procard Record Keeping System requirements? (Refer to Procard User Guide, Chapter 2.)

Audit Task	Yes	No	Comments
a. Have the individual Cardholder statements been reconciled to the receipts?
b. Have the individual Cardholder statements been signed and dated by the user?
c. Are appropriate receipts stapled to the statement?
d. Are all the receipts accounted for?
4. During the review, confirm that (ask question):
a. The Cardholder has stayed within his/her transaction limits set on the card (on Card Application Form).
b. The Records Manager has reconciled each Cardholder statement to FRS for each cycle.
5. Is the Cardholder staying within his/her budget (verify that overspending has not occurred)? [Accountant issue - not the responsibility of the PART]
6. Where is the card stored when not used?
7. Is the card now in a secure location?
8. Is the card used by only the Cardholder?
9. Have any of the charges been disputed? If "Yes," have they been handled appropriately (Statement of Questioned Item Form)?
10. Has the Cardholder used appropriate channels to report a lost or stolen Procard, if applicable?
11. Is a copy of the approved Card Application Form on file with the Cardholder’s records?
12. Do Cardholder and Records Manager have a copy of the User Guide?
13. Remind Cardholder that all records and activity against card are open to review by internal, external, state and federal auditors.
14. Is a copy of the Cardholder Agreement Form on file?

Audit Task	Yes	No	Comments
Documentation Procedures
15. Is the BE/ER Form included, when appropriate, and does it have the required signatures?
16. Has the Cardholder complied with the requirement to use contract vendors (MHEC, State, University) if contract is available?
17. Has the Cardholder complied with the requirement not to purchase any of the restricted commodities?
18. Have the Cardholder’s vendors complied with the policy not to reference the card number on exterior packaging materials? [Ask the Cardholder this question. Not required to keep exterior packaging materials.]
19. Does the backup documentation include appropriate line item details?
Transaction Procedures
20. Is the object code/account charged appropriate for the expense? [Grant/contract issue. Not responsibility of PART]
21. During the review confirm that:
a. The card has been used only for legitimate University business.
b. No personal purchases have been made.
c. None of the transactions appear to be dovetailed to avoid the per purchase transaction limit set on the card.
d. The Cardholder has received contract pricing.
e. No sales taxes have been charged to the purchases.
f. Credits have been handled appropriately.
g. Returned items have been handled appropriately.
h. Grant charges have been made within the grant time frame. [Grant/contract issue - not responsibility of PART]
i. Documentation supports the legitimate business purpose of all transactions.

 

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For questions or comments regarding this site please contact: lankowski@admin.umass.edu
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Last updated: July 1, 2004