YELLOW SHEET Office of the State Auditor of Missouri Claire McCaskill

Report No. 2004-87

November 19, 2004

Improvements needed in oversight of university procurement card programs; management and oversight has not been consistent

Government and private organizations have implemented procurement card programs to reduce administrative costs and provide a more convenient and efficient procurement method than a purchase order system.  Of the state's 10 four-year colleges and universities seven have implemented procurement card programs.  We selected the three universities accounting for 98 percent of the total purchases and 95 percent of the cards issued for 2003 – the University of Missouri System, Truman State University and Central Missouri State University (CMSU).   

We did not perform a detailed review of the University of Missouri System procurement card program because the university had adequate internal and external reviews of the program.  Truman State University had limited its potential for procurement card abuse by only issuing 46 procurement cards and re-evaluating the need for each card every six months, and in October 2003 implemented an internal audit function which reviews the procurement card program on a semiannual basis.

CMSU had a significant number of unauthorized purchases

CMSU staff used procurement cards to purchase fast food, gasoline, computer equipment, leases/rentals, and personal purchases totaling approximately $43,000 between January 1, 2003 and March 31, 2004.  The CMSU procurement cardholder agreement and manual specifically list these items as unauthorized purchases.  (See page 6)

Purchase documentation, review, and approval process not always adequate

Our office found 59 of 252 samples purchases, totaling $46,066, had been approved by budget directors without itemized receipts as required in the university's procurement cardholder manual.  Further review disclosed 26 of the 59 purchases, totaling $17,000 had not been recorded in a "transaction log" which should be used to record cardholder purchases, as required in the university's procurement cardholder manual.  In addition, budget directors were approving their own purchase, totaling approximately $28,000, during our review period, because CMSU had not delegated anyone above the budget directors to review and approve their purchases.  We also identified 8 instances where cardholders exceeded single transaction limits by splitting purchases to the same merchants, on the same date.  The budget directors, who approved these purchases, told us they did not think making several purchases to the same vendor on the same day by the same cardholder would be inappropriate or an attempt to circumvent proper procurement procedures.  (See page 7)

CMSU lacked standard procedures and training forums were poorly attended

The university did not establish standard procedures each department must follow in reviewing and approving procurement card purchases.  CMSU's accounting department has conducted forums to discuss inadequacies in documentation and improper practices.  However, attendance at the forums was not mandatory because the director said he did not believe he had the authority to make them mandatory.  Additionally, CMSU did not ensure procurement card accounts were promptly closed for terminated employees.  (See page 8)

CMSU cardholder use has not been analyzed

As of March 2004, we found 90 of the 373 individual or departmental procurement card accounts CMSU had issued, had not been used during the 15-month review period.  An additional 13 accounts had been used only once during our audit period.  Sound business practices dictate university personnel review procurement card usage to evaluate each employee's continued need for a card.  (See page 9)

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