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Consultants recommend changes to Unified Government’s employee purchase-card controls

UG purchase card recommendations
Posted at 12:39 PM, Aug 05, 2022
and last updated 2022-08-05 13:39:34-04

KANSAS CITY, Mo. — Consultants hired to provide a financial assessment of the Unified Government for Wyandotte County and Kansas City, Kansas, found that more than 360 Unified Government employees currently have purchasing cards.

Those cards allow employees to spend taxpayer money for governmental purposes, but they also need to be monitored closely and regularly to ensure money is spent in accordance with UG policy.

“If the process is not being monitored, it can go awry,” Byron C. Marshall said. “The other thing that can happen, if it’s not monitored properly, is people can buy things that are prohibited.”

Marshall, who is the managing director of Integrated Public Management Solutions, presented the consultants’ findings along with Robert Bobb, who owns a public/private sector consulting business.

The assessment found that UG staff has made roughly 2,000 purchase-card transactions per month during a three-year period from 2019-21.

Annual purchasing averages $6.86 million via UG-issued purchase cards with an average estimated transaction of $300.

With more than $4.4 million in additional expenditures so far in 2022, there have been approximately $25 million in transactions on employee purchase cards since Jan. 1, 2019.

“P-cards can be very beneficial to government,” Marshall said. “They can cut out the paperwork and allow people to get things very quickly. You still need to follow the bid or quote responsibilities, but they can speed things up for somebody who needs something right away. On the other hand, they need to be monitored closely, so that people don’t circumvent your policies or inadvertently screw you up in another way.”

Bobb, Marshall and Nancy L. Zielke, the managing director at Alvarez and Marsal Public Sector Services, termed UG purchase-card usage as “significant” and recommended several areas for improvement to “optimize our financial sustainability as public stewards of taxpayer dollars”:

  • Realign the UG’s purchasing department to be part of the Finance Department rather than the County Administrator’s Office in line with common practices;
  • Strengthen and broaden the UG’s purchase-card policy and assess current spending trends to ensure compliance with stated policy;
  • Review the number of purchase cards currently issued to employees to determine if they are needed with an eye toward decreasing the number in circulation; 
  • Conduct in-depth, external audits of P-card usage on a regular basis and assess for areas of improvement;
  • Updated the UG’s policy and procedures manual for purchase cards, which hasn’t been done since 2007;
  • Regular re-education of purchase-card policies for those granted such access;
  • Review and implement changes, if needed, to the UG’s merchant category codes to ensure proper usage of purchase-card transactions;
  • Hold purchase-card users and those who approve transactions accountable for possible unauthorized purchases.

The consultants noted that the UG “Purchasing Director,” whose name is not specified in the report, believes the UG’s purchasing policies and procedures “are often not followed.”

“Maybe things are going just fine, but what we suggest you do is assess your current P-card purchasing policies,” Marshall said. “They have not been changed officially since 2007 or 2008, so they may not be up to snuff. We’ve seen a couple of other versions that were proposed, changes that were never signed off on by the prior administrator. At least there was some thought given to making a change, but no change has been made.”

He added that proper implementation of merchant category codes and internal purchase reviews along with regular external audits should be sufficient to monitor for such fraud in combination with controls put in place by the Finance Department.

"The policy that (Interim County Administrator) Ms. (Cheryl) Harrison-Lee has is a very simple policy,” Robb said. “It says that if you use the card for personal use, you will be terminated. The policy that was not approved by the prior administrator is a several page document. It's a great read, but the policy we have now is one page, employees sign off on it, it's very clear about what your responsibilities are as far as the use of those cards.”

Robb agreed that employees who are proven to have abused the use of a government-issued purchasing card should be terminated.

“There’s no ifs, ands or buts about it,” he said. “My grandmother used to say that one bad apple spoils the whole bushel, so it should be taken seriously.”

The seven-minute conversation about purchasing card use and recommended actions begins around the 3:06:35 mark: