By: Anna Krol
In its January 2018 report titled Corporate Credit Card (Data Analytics) Audit, the Calgary City Auditor’s Office found non-compliance in the employee use of the corporate credit card for low-dollar value purchases under $5,000.
The City Auditor found that split transactions were occurring to divide purchases and circumvent threshold requirements for public tendering. The Auditor noted that splitting transactions can expose the city to fraud and render transaction limits void:
“Split transactions increase financial risk to as they circumvent the control of having a transaction limit in place. Transaction limits mitigate The City’s financial exposure to unauthorized and fraudulent transactions, as well as ensure compliance with Supply policy which requires the purchase order process to be utilized when purchasing goods greater than $5000.”
The Auditor found that city employees were not submitting their credit statements on time and remedial action such as the suspension of cards was not being taken by superiors.
The Auditor also found other mistakes and improprieties within accounts receivable, such as missing receipts, the submission of incorrect invoices, and untimely deactivations that went undetected and unremedied by city staff.
As this report illustrates, using employee corporate credit cards for low-dollar transactions comes with the risk that the purchasing tool can be used to circumvent public tendering. The Auditor identified institutional oversight and ongoing employee training as the most effective means of preventing such infractions in the future.