JANUARY 27, 2011 3:36 p.m. (0)
Some charged items in violation of state policy such as gift cards, hotel rooms and meals, according to a review by the South Carolina Legislative Audit Council.
Some exceeded the state-imposed limit of $2,500 for an individual purchase and others divided the cost of an item to circumvent the limit. In addition, blocks on certain types of merchants such as ABC stores that are required by state policy were not always in place.
“It is alarming to see how much money is spent on credit cards, and in the way some of these agencies do it,” said state Sen. Mike Fair of Greenville.
The audit council reviewed the use of P-cards, which were instituted in 1996 so employees could make small purchases – generally for supplies – without a purchase order. The idea was to streamline payments, plus the state would get rebates from the Bank of America, which issues the Visa cards.
In all, 93 agencies have more than 10,000 active cards, and from Aug. 1, 2008 through July 31, 2009, charged about $163 million. In 2009, rebates – 1.32 percent of each purchase – amounted to $2.7 million, which the audit council said could be enhanced if all state agencies used the cards and all used the card for the allowed purchases.
An additional $4.3 million was spent on supplies using a purchase order instead of the P-card. The State Ports Authority and Santee Cooper are exempt from the state procurement code and therefore do not use the state’s contract for P-cards.
Among the findings:
• Six cards used by Vocational Rehabilitation employees had purchases between $3,500 and $5,000 and no supporting documentation.
• Employees in several agencies used their state cards for personal expenditures, including a Department of Mental Health employee who mistakenly charged $130.79 to pay her insurance bill. She reimbursed the agency.
• South Carolina State University cards were used 17 times at the same Orangeburg restaurant in violation of state rules. The total charged was $4,000 and the meals were listed “official dinner.”
• Twenty Department of Health and Environmental Control and 10 Department of Motor Vehicles cards had no spending limits.
• Some state employees had more than one P-card.
• Stolen cards had been used to buy items that should have been blocked, including $8,000 charged at a liquor store on a Department of Mental Health card and $270 for veterinary services on a Department of Transportation card. The mental health charge was disputed and Bank of America credited the agency but the transportation charge was not properly disputed.
The audit council also asked for state agencies’ own internal audits and reported:
• A University of South Carolina coach used a card to buy airline tickets for his wife and daughter to go with him to Alaska for a game. The coach was disciplined.
• At the Medical University of South Carolina, 20 percent of cardholders bought items specifically prohibited by university policy.
• Seven purchases at the Department of Transportation were split to avoid the $2,500 limit.
The audit council faulted the government for not having a single agency or person responsible for overseeing the program. The Budget and Control Board administers it and the Comptroller General’s Office pays the bills. Other states have a person assigned to oversee such programs. In addition, other states have negotiated larger rebates with their lending institution.
Fair, who is on the LAC board, said he expects the LAC report will get the attention of legislators. Aencies should propose guidelines for adoption by the General Assembly.
Fair said misuse would not happen if the state required prior approval before expenditures are made, a clear paper trail, that cards be issued in the name of the employee, not the agency and routine audits.
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