Compliance Review of Purchasing Cards for General Services Department

Cover Letter

DATE: July 17, 2018
TO: Tony M. Royster, General Manager General Services Department
FROM: Georgia Mattera, Chief Deputy Controller, Office of the Controller
SUBJECT: COMPLIANCE REVIEW OF PURCHASING CARDS

The Office of the Controller completed a compliance review of the General Services Department’s (GSD) oversight of Purchasing Card (PCard) usage to ensure expenditures are authorized, supported, and comply with the City’s PCard Program Cardholder Manual (Manual).

Management of each City department must design, implement, and maintain a system that reasonably assures PCard usage is authorized, supported, and complies with the Manual. The Office of the Controller assists management by performing periodic assessments of the of this departmental system. These assessments complement, but do not in any way replace, management’s assurance responsibilities.

Our review identified certain areas in which GSD can enhance its oversight to ensure PCard usage is authorized, supported, and complies with the Manual, as detailed in the attached report.

Background

Background The City of Los Angeles (City) created the Purchasing Card (PCard) Program to provide departments with an efficient, cost-effective way of routinely paying for low value items, and during disasters a quick way to make large purchases. PCards are credit cards issued to City employees. The Office of the Controller administers the PCard Program for Council-controller departments, while each department’s management choses employees to receive PCARDs, approves and reviews PCard transactions, and ensures compliance with the City’s PCard Program Cardholder Manual (Manual). The Office of the Controller completes periodic compliance reviews of PCard usage to ensure expenditures are authorized, supported, and comply with the Manual.

Key Facts

FACT #1: GSD provides essential support services for non-proprietary City departments, including building maintenance, custodial, fleet, fuel, mail, parking, printing, publishing, supply, procurement, inventory, mail, messenger, materials testing, and parking services.

FACT #2: GSD’s $235 million budget for fiscal year 2018 included $73 million for fleet services, $45 million for fuel and environmental compliance, $32 million for building maintenance, $31 for real estate services and $21 million for custodial services.

FACT #3: GSD assigned 173 PCards to its employees and they collectively spent $1.3 million with  their PCards.

FACT #4: Most PCards issued to GSD employees have a $5,000 monthly limit and a $1,000 single purchase limit.

Compliance Review Results

Compliance Review Results We identified opportunities where GSD can enhance its oversight and ensure PCard usage by its employees is authorized, supported, and complies with the Manual, as follows:

  • Ensure PCard holders are not using PCards to purchase items from vendors with established contracts in the City’s procurement program, as the City’s purchasing agent may have negotiated better prices.
  • Periodically remind PCard holders of prohibited purchasing practices, such as purchasing electronics.

Analyze PCard transactions to ensure PCard holders are not making split purchases to circumvent single purchase transaction limits.