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Purchase Card

Why Purchase Cards Aren’t the Enemy

on April 14, 2015

For someone who happily resides in Georgia, the Dekalb County P-Card scandal with Commissioner Elaine Boyer hit very close to home. (Former DeKalb County Commissioner Elaine Boyer pleaded guilty in September to federal fraud charges related to personal airline trips and hotel stays purchased with her DeKalb County purchase card.) In the aftermath of this scandal, the Georgia state legislature actually considered banning elected officials from using government issued purchase cards as a result of a DeKalb County scandal that resulted from allegations that several elected officials had used their purchase cards to buy personal items. Thankfully, they’ve since backed off this proposal.

It seems like every time there is news of fraud, waste, and abuse in a purchase card program, one of the first thoughts is, “We need to determine if we should continue this program!”  This first thought is consistent whether it is related to a corporate program or a government program.  While it is a natural reaction to abuses, the many benefits of purchase card programs generally trump this Draconian response. Purchase card programs still provide tremendous cost savings over traditional procure-to-pay processes: credit card rebates help to fund the operating expenses of the program, and purchase efficiencies are realized that help organizations accomplish objectives in the most timely manner possible. Still, lack of financial controls leads to rampant purchase card abuse, when in reality, implementing proper financial controls for government and corporate purchase cards is ridiculously simple.

First, organizations evaluate the holders of the cards to make sure they really need the cards, and the controls are evaluated to ensure that card administrators and purchasing managers know what is happening. Second, technology systems should be implemented to help card administrators and purchasing managers identify unwanted behaviors, like in the case of Elaine Boyer.

The integrity of purchase card programs is a function of documented policies, a program for monitoring cardholders’ compliance with the policies, and someone with ultimate responsibility for acting when policies are violated.  At Oversight, our customers are able to automatically monitor 100% of their purchase card transactions, and simultaneously influence cardholders to comply with purchase card policies while reducing the time and effort related to monitoring compliance by over 50%.  There is a tremendous opportunity for governments to quickly, easily, and cost effectively leverage automated monitoring to maintain compliance and ensure taxpayer confidence.

Compliance and control are important objectives in any corporate or government purchase card program.  The good news is that the ban on purchase cards for government officials has been removed from the legislation, and instead they are calling for more effective financial controls which now include requirements for transparency when issuing cards to elected officials in Georgia, adherence to strict transaction limits, a description of purchases that are allowed and prohibited, and an auditing process with penalties for abuse.

I’m not normally a fan of government legislated policy, but in this case the legislation is only calling for Georgia elected officials to be subject to policies that are in place at every public company with a purchase card program.

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