Texas State Auditor's Office SAO Reports: An Audit Report on Procurement Card Processes and Controls

General

An Audit Report on Procurement Card Processes and Controls

February 2002

Report Number 02-022

Overall Conclusion

Agencies have not consistently implemented effective processes and controls over the use of procurement cards. One of the three agencies we reviewed did not have adequate controls to prevent or detect inappropriate use of procurement cards. In addition, the Building and Procurement Commission (Commission) has not actively managed the contract between the State and the vendor bank that provides the procurement cards. The lack of contract management has cost the State money, but omissions in the contract make it impossible to determine how much.

In fiscal year 2001, Texas agencies and universities charged more than $140 million on procurement cards.

Key Facts and Findings

• The Commission did not maintain a copy of the complete procurement card contract or track contract changes. The parts of the contract that we were able to review lacked sufficient detail to hold the vendor accountable. Because the Commission did not manage the contract well, the vendor may have given state agencies and universities misleading information and may have underpaid or delayed paying the annual rebate due to the State. The Commission has been working to address these problems. A new contract will be negotiated this year.
  
  
• The Commission could help agencies develop and implement effective controls over their procurement card programs. The Commission should also use available data on procurement card purchases to improve the Commission's volume buying ability.
  
  
• The Parks and Wildlife Department (Parks) does not have sufficient controls over procurement cards. As a result, we found credit card purchases not in the State's interests, such as charges made against the card of a deceased employee, charges for potentially inappropriate purchases, and a charge already reimbursed to an employee through a travel voucher. Parks has already begun to address many of the issues raised in this report.
  
  
• The Department of Criminal Justice (TDCJ) has implemented an adequate system of controls that relies on post-payment reviews. Of the purchases we tested, we found only one non-compliant purchase and several split purchases that had not been found by TDCJ. TDCJ can strengthen its system by using data analysis to look for inappropriate purchases.
  
  
• The Texas Department of Transportation (TxDOT) has a strong system of controls that relies on pre-authorization of purchases and management review of monthly reports. Except for some split purchases, we did not find any inappropriate purchases in our sample that TxDOT had not already identified.
  

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