Sunday, August 05, 2007

Purchasing Cards... Again????

The Fayette County Commission is once again looking at instituting a purchasing card program. They tried this back in late 2001 or early 2002, finally ending the program in 2006 due to serious misuse of the cards.

I went back and read the minutes from the 2001 meetings when the Commissioners cross-examined Wachovia representatives and the then County Finance Director, Mark Pulliam.* They had a lot of questions. Many more than I heard in the August 2nd meeting. I’m expecting there will be a more intensive questioning process at Thursday night’s Commission meeting.

A number of problems were mentioned and addressed during this past Wednesday’s discussion of the program. One was how labor intensive the review process had been. One of the solutions given to the problem was that one card, rather than all as in the past, would be reviewed by the staff each period. [Note: we “assume” a period is one billing cycle of a month.] Also, individual directors would be responsible for monitoring their respective departments.

Toward the end of the discussion the abuse of the P-Cards is brought up as another problem.

I worked for the Federal Home Loan Bank and the Office of Thrift Supervision for close to 14 years. At one point I managed the department that had the responsibility of reviewing the purchases made by roughly 250 – 300 employees on their government-issued credit cards.

The staff reviewed every single card statement every single month. I randomly selected some statements to review as a check and balance. Even knowing that the cards were being scrutinized and that unauthorized purchases were verboten, the staff abused them. My favorite was the guy who put his fiancĂ©’s engagement ring purchase on the card. I also loved the one where the guy decided to go for a balloon ride in Hawaii.

Those are the abuses that stand out. There were lots of little violations that weren’t quite so blatant. Groceries on the way home from work, gas purchases that far exceeded the amount of travel, plane tickets to places we didn’t travel and so on and so on. Depending upon the severity of the abuse the employee could lose the use of the card or even their job.

One difference between the government card system I monitored and the one the County is contemplating is that there the employee paid the bill. They claimed their expenses, received a check from the government and then paid the credit card. The County will get the bill in this instance and have to pay it. If they’re not reviewing all the purchases, how easy is it going to be to think you’ll be able to get away with sliding something onto the P-Card? Hate to say it, but it’s human nature. When we’re in a pinch, or when we’re angry at our boss, or we didn’t get the raise we felt we deserved, it’s easy to justify pushing the envelope a bit.

The previous Commission put part of the onus for monitoring the cards on the department heads also. Some department heads violated the P-Cards. Although interim County Manager Jack Krakeel stated that there weren’t any consequences for misuse during last Wednesday’s discussion, one high-ranking employee lost his job partially as a result of misuse of the P-Card. Another left when his P-Card purchases came under scrutiny. When the Commission really looked at what was going on with the cards with all the stringent check and balances they thought were in place, they pulled the plug on the program.

The previous Commission had strict budget guidelines and constraints to help keep a check on card abuse, as is being currently suggested.

The only differences I could see what is currently being proposed and the previous program is that fewer cards will be audited and the county will be able to balance automatically via computer with the bank. That’s nice, it will save time, but it doesn’t stop abuse. To use an old clichĂ©, this is, to my way of thinking, a recipe for disaster. I think this thing may not fly ultimately when they look at it again at Thursday’s meeting. We’ll see.


No comments: