Report No. 2008-68
October 2008
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Overall Purchasing Card Oversight Has Improved; However, Fraud Occurred at One Agency, and Further Improvement Is Needed
State employees use three types of cards for purchases including (1) procurement cards, (2) fleet fuel cards, and (3) business travel cards. All three purchasing card programs are under the oversight of the Office of Administration (OA) and administered by contracted service providers. Each participating state agency has designated program coordinators. This report followed up on recommendations in our 2002 report titled Oversight of the State's Procurement Card Program (Report No. 2002-60) and applicable recommendations in our 2003 report titled State Vehicle Maintenance Facility and Fleet Fuel Card Program (Report No. 2003-107). Audit objectives included (1) analyzing agency procedures and controls related to procurement and fuel cards, (2) reviewing transactions for reasonableness, and (3) analyzing the procurement card vendor contract.

Improper fuel and procurement card transactions
In late February 2008, Missouri Veterans Commission (MVC) officials discovered an employee had been improperly using procurement and fuel cards for personal use since June 2006. Initially, MVC officials identified $11,771 in questionable fuel and procurement card purchases. While conducting audit work shortly after the officials identified the problem, SAO audit staff identified additional questionable transactions. MVC officials also subsequently determined these transactions were improper. These transactions plus additional related transactions the officials identified totaled $2,467. The employee who committed the fraud was terminated from employment and prosecuted, and provided restitution to the state for the identified fraudulent transactions. MVC officials have taken steps to improve internal controls over card usage since identification of the fraud. (See page 8)

OA has made improvements in card programs, but some issues need further evaluation
The OA's oversight of the procurement and fuel card programs and guidance to state agencies has improved since our prior reports. In May 2008, OA officials revised the state's procurement card policies and procedures manual, which provides guidance to state agencies, to address new topics. In addition, effective with the 2007 contract, Missouri's 1.44 percent rebate from the procurement card contractor is one of the highest identified in a state procurement card survey we reviewed. However, the following areas need additional consideration (1) inclusion of procurement and fuel card controls in agency internal control plans, (2) allocation of rebates, and (3) vendor discounts. (See page 15)

Agencies reviewed had control weaknesses, but had also developed improved procedures
Our review of procurement card procedures and transactions at 8 of the 28 participating agencies identified that agency staff did not always (1) comply with rules and guidance in the state procurement card policies and procedures manual or other common program controls, (2) review documentation related to automatic payments, and (3) perform annual card usage and transaction limit assessments. Some of these agencies had also developed improved procedures that could be better communicated to other agencies. Some agencies made policy decisions to increase card usage resulting in more rebates. (See page 20)

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