November 8, 2007
Director of Communications
USG Investigates Purchasing Card Use at all Institutions
VALDOSTA - As a result of a statewide audit which uncovered
improper or, in some cases, fraudulent use of Georgia’s Purchasing
Card Program the University System of Georgia has launched an
extensive investigation of P-Card usage at each of its 35
Chancellor Erroll B. Davis Jr. and Chief Audit Officer and Associate Vice Chancellor Ronald Stark, provided the House Appropriations Subcommittee with background about the University System of Georgia’s P-Card administration, action recently taken in response to the state auditor’s report and additional steps planned within the next few months to improve USG P-Card activity.
“The idea behind the P-Card program is a good one. It reduces the number of steps to purchase goods and services by 14 and reduces a single transaction process cost by an estimated $100,” Davis said. “That allows our campuses to be more responsive and reduce costs. These are good goals for any business. And in the case of state government, it is good for taxpayers, who see less of the tax dollar go towards operational costs and more to direct programs and services.”
Chancellor Davis further explained that if problems and gaps are uncovered, they will be fixed and the determination made as to whether these issues are symptomatic of a larger culture within the University System that may not appropriately value effective operational risk management. If this is the case, Davis vows to implement the necessary steps to create a more effective risk management culture within the University System of Georgia.
“Ultimately, this is about leadership and creating a sense at every level of the organization that leadership means accepting the responsibility to manage risk on an ongoing basis,” Davis said.
Stark explained to the House Appropriations Subcommittee that the USG is taking action when instances of fraud have been clearly identified and on a larger scale, establish policies, procedures and the necessary oversight to manage its P-Card program.
Several months ago, the USG initiated a P-Card review that will include an in-depth analysis of the roughly 612,000 Fiscal Year 2007 P-Card transactions and an analysis of the internal controls over P-Cards at each USG institution.
Stark stated that the USG internal audit staff and the audit staff from each institution will conjointly identify and root out past fraud as well as provide recommendations regarding additional steps institutions can take to mitigate the risk of fraud in the future.
Each institution-level audit will include interviews, review of documentation associated with P-Card transactions, analysis of internal controls, and if necessary provide recommendations to improve P-Card procedures. The on-campus reviews are scheduled to begin in November and completed no earlier than January 2008.
The Business Manual of the Board of Regents provides guidelines about business policies and procedures for all 35 USG institutions. These guidelines clearly prohibit use of the P-Card for personal purchases and some additional restrictions. Each institution is responsible for designing P-Card procedures that ensure the necessary controls are in place to effectively safeguard the assets of the institutions.
Valdosta State University’s 268 P-Cards are monitored by Business Services and card holders are required to complete an online orientation, which addresses transaction limits, authorized and unauthorized purchases, reconciliation of monthly statements and procedures for reporting lost or stolen P-Cards. VSU requires the use of paper statements and receipts for approval of each P-Card transaction, which requires the supervisor of each cardholder to review the detailed receipt and verify approval of each transaction. As a final step, the Business Services staff reviews all receipts and questionable transactions are investigated in an effort to determine their legitimacy.