Did you know the state of Wisconsin issues more than 18,000 cards to certain state employees to make purchases?
The Wisconsin Legislative Audit Bureau (LAB) has completed a review of the state's program allowing state employees to use purchasing cards for state business purposes. The audit findings are mixed. There was not evidence of rampant fraud; however compliance with requirements could be improved.
A total of 3,071 purchasing card transactions recorded during 2008 was reviewed by the LAB. The purchases were selected based on the potential risk of abuse or fraud. Under the state's program, executive branch agencies and University of Wisconsin institutions used the purchasing cards.
Here are key audit findings.
The average purchase amount during 2008 was $233 per transaction. Some purchases, however, were greater than $25,000. Purchases made with state cards constituted only 4 percent of supply and service expenditures during 2008.
The Department of Administration (DOA) does not set limits on the amount of cards an employee may possess. Forty cardholders had 10 or more cards during 2008. Each card is limited to a maximum balance for its two-week billing cycle and a maximum amount for a single transaction.
The average credit limit was $9,382 at state agencies and $14,576 at UW institutions. The LAB determined that spending limits in many cases were higher than necessary, creating a potential financial risk to the state.
More than 1,100 cards issued during 2008 were unused.
Most cardholder transactions, 76.2 percent, followed strict documentation requirements. However, they could be improved to include a specific state business purpose for purchases.
The LAB found that, "Instances of inappropriate purchases were rare." Here were exceptions the LAB identified:
• $52,463 in excessive or unnecessary purchases, including purchases that have a state business purpose but appear to be luxury items or to include avoidable costs such as late fees
• $9,181 in inappropriate purchases, including purchases made for personal use or that are otherwise unallowable
• $5,580 in third-party error or fraud, including erroneous or fraudulent charges made by vendors or unauthorized users
• $4,378 in unknown purchases, including instances in which there was not sufficient documentation for the LAB to determine what was purchased or whether it was appropriate, typically because of a lack of a receipt
• $2,897 in purchases that represented misapplication of a purchasing card, including purchases that had a state business purpose but were not allowed to be made using a purchasing card.
• Eighteen (18) transactions totaling $52,463 in excessive and unnecessary purchases included, according to the LAB, "five business-class airfare tickets for State of Wisconsin Investment Board employees to travel to meetings in Europe, which totaled $48,226. Documentation maintained with two of the airfare transactions showed that the cost of two coach-class tickets would have been $12,600 less than the cost of two business class tickets."
Excessive or unnecessary purchases at eight other agencies were identified, including:
• A $695 fox fur stole purchased by a UW-Milwaukee cardholder for a theater production.
• Two attaché cases purchased by a Department of Transportation cardholder for $230 each.
• Four computer bags purchased by a UW-Milwaukee cardholder from a luxury luggage merchant for $195 each.
The LAB found 59 inappropriate purchases totaling $9,181 including one cardholder who accounted for 4 transactions totaling $1,142, including:
• A $223 purchase from the UW-Madison Athletic department for tickets to a theatrical production.
• A $714 purchase from a vacation Web site for a trip to Las Vegas.
• A $56 purchase of a watch and purse.
• A $149 purchase for video game console repairs.
The LAB is recommending that the DOA work with UW institutions and state agencies that supply state purchasing cards to lower spending limits whenever possible, close unused accounts, require cardholders to explicitly document the state business purpose for purchases, reinforce prohibitions against the use of cards for certain travel expenses, and ensure employees given use of cards receive appropriate training.
As a member of the Joint Legislative Audit Committee, I commend the LAB for another outstanding, comprehensive review for the benefit of the state of Wisconsin and its taxpayers.
- Sen. Mary Lazich, R-New Berlin, can be reached at Sen.Lazich@legis.wisconsin.gov; Senator Mary Lazich, State Capitol, P.O. Box 7882 Madison, WI 53707; or 1-800-334-1442.
The Wisconsin Legislative Audit Bureau (LAB) has completed a review of the state's program allowing state employees to use purchasing cards for state business purposes. The audit findings are mixed. There was not evidence of rampant fraud; however compliance with requirements could be improved.
A total of 3,071 purchasing card transactions recorded during 2008 was reviewed by the LAB. The purchases were selected based on the potential risk of abuse or fraud. Under the state's program, executive branch agencies and University of Wisconsin institutions used the purchasing cards.
Here are key audit findings.
The average purchase amount during 2008 was $233 per transaction. Some purchases, however, were greater than $25,000. Purchases made with state cards constituted only 4 percent of supply and service expenditures during 2008.
The Department of Administration (DOA) does not set limits on the amount of cards an employee may possess. Forty cardholders had 10 or more cards during 2008. Each card is limited to a maximum balance for its two-week billing cycle and a maximum amount for a single transaction.
The average credit limit was $9,382 at state agencies and $14,576 at UW institutions. The LAB determined that spending limits in many cases were higher than necessary, creating a potential financial risk to the state.
More than 1,100 cards issued during 2008 were unused.
Most cardholder transactions, 76.2 percent, followed strict documentation requirements. However, they could be improved to include a specific state business purpose for purchases.
The LAB found that, "Instances of inappropriate purchases were rare." Here were exceptions the LAB identified:
• $52,463 in excessive or unnecessary purchases, including purchases that have a state business purpose but appear to be luxury items or to include avoidable costs such as late fees
• $9,181 in inappropriate purchases, including purchases made for personal use or that are otherwise unallowable
• $5,580 in third-party error or fraud, including erroneous or fraudulent charges made by vendors or unauthorized users
• $4,378 in unknown purchases, including instances in which there was not sufficient documentation for the LAB to determine what was purchased or whether it was appropriate, typically because of a lack of a receipt
• $2,897 in purchases that represented misapplication of a purchasing card, including purchases that had a state business purpose but were not allowed to be made using a purchasing card.
• Eighteen (18) transactions totaling $52,463 in excessive and unnecessary purchases included, according to the LAB, "five business-class airfare tickets for State of Wisconsin Investment Board employees to travel to meetings in Europe, which totaled $48,226. Documentation maintained with two of the airfare transactions showed that the cost of two coach-class tickets would have been $12,600 less than the cost of two business class tickets."
Excessive or unnecessary purchases at eight other agencies were identified, including:
• A $695 fox fur stole purchased by a UW-Milwaukee cardholder for a theater production.
• Two attaché cases purchased by a Department of Transportation cardholder for $230 each.
• Four computer bags purchased by a UW-Milwaukee cardholder from a luxury luggage merchant for $195 each.
The LAB found 59 inappropriate purchases totaling $9,181 including one cardholder who accounted for 4 transactions totaling $1,142, including:
• A $223 purchase from the UW-Madison Athletic department for tickets to a theatrical production.
• A $714 purchase from a vacation Web site for a trip to Las Vegas.
• A $56 purchase of a watch and purse.
• A $149 purchase for video game console repairs.
The LAB is recommending that the DOA work with UW institutions and state agencies that supply state purchasing cards to lower spending limits whenever possible, close unused accounts, require cardholders to explicitly document the state business purpose for purchases, reinforce prohibitions against the use of cards for certain travel expenses, and ensure employees given use of cards receive appropriate training.
As a member of the Joint Legislative Audit Committee, I commend the LAB for another outstanding, comprehensive review for the benefit of the state of Wisconsin and its taxpayers.
- Sen. Mary Lazich, R-New Berlin, can be reached at Sen.Lazich@legis.wisconsin.gov; Senator Mary Lazich, State Capitol, P.O. Box 7882 Madison, WI 53707; or 1-800-334-1442.
