YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

August 29, 2002

Report No. 2002-60

State credit cards are issued to employees with excessive spending limits and no assessment of who actually needs one, which leaves the state unnecessarily liable

This audit evaluates the state's procurement card purchasing system, in which 2,600 employees have state credit cards for state business purchases.  During our audit period, 99 percent of the purchases were made by four departments: conservation, transportation, natural resources and mental health.  Auditors analyzed how employees used the cards and departments reviewed these purchases.  The state started this program in 1998 to reduce administrative costs of processing small dollar purchases.  The following highlights the findings.

Spending limits are too high 

Audit analysis showed 1,500 of the employee cardholders only needed a $1,000 monthly limit, instead of the $3,000 limit available to each cardholder.  In fact, about one-third of the employees seldom or never used their card and 50 percent spent less than $400 a month.  In addition, analysis showed the maximum $1,000 individual purchase limit as unnecessarily high.  About 55 percent of the employees reviewed by auditors had no individual transaction greater than $299.  The state is ultimately liable for all purchases made on these cards and such high limits expose the state to unnecessary risk.  (See pages 3 and 6)

Most purchases made without prior review, and some with no review

State card guidelines did not require employees to seek approval for purchases beforehand, unless the purchase exceeded the $1,000 single transaction limit.  As a result, department officials relied on after-the-fact reviews to check for allowable and appropriate purchases.  In addition, auditors found no indication of any pre-purchase or post-purchase review by conservation employees.  (See page 13)

Employee cardholders did not give preference to Missouri businesses

State law requires purchase preference be given to Missouri products and firms when quality is equal or better and the price is the same or less.  Auditors found about $488,000 in goods purchased from non-Missouri vendors during the audit period.  For example, conservation employees routinely bought hunting and fishing equipment from a Nebraska-based vendor when a Missouri-based vendor carried similar products.  (See page 11)

Cards not issued based on job duties

Office of Administration officials allowed departments to decide the number and type of employees who could have cards, resulting in varying practices by department.  For example, nearly half (1,037 of 2,107) of the conservation employees have cards, while less than 1 percent (45 of 9,388) of the mental health employees have cards.  (See page 4)

Employees buy some unallowable items with cards

State card guidelines prohibit employees from using cards to buy postage stamps, auto repairs, telephone equipment or items for personal use.  Auditors found conservation employees bought more than $2,700 in postage stamps and transportation employees bought more than $2,600 in auto repairs.  In addition, a transportation employee purchased $10,000 in watches, cutlery, fishing knives, travel cases and beverage coolers for resale in the department's employee catalogue store.  Because the employee bought these items for others' personal use and not official state business, state officials called the purchases inappropriate.  (See page 11)

Attractive items bought with cards, but not inventoried

Conservation and transportation employees purchased items - including digital cameras, binoculars, television and power tools - considered attractive for personal use, but did not identify or inventory these items as state property, which is required by state regulations.  (See page 11)

Complete Audit Report