2015-01 Performance Audit Report: County of Hawai'i's Purchasing Card (pCard) Program

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Audit Results While most transactions reviewed were generally appropriate, some purchases did not follow county policy, had a questionable public purpose, and may have violated state law. The purpose of the County's Purchasing Card (pCard) Program is to establish an efficient, cost- effective method of purchasing and paying for small -dollar transactions. County policies and other documents define the pCard Program and establish the rules and guidance employees must follow in order to retain the privilege of having and using County pCards. In 2014, the County spent approximately $1.15 million using its pCards. We initially reviewed 570 transactions totaling $94,036.42 from 2014. During the course of our audit, we identified transactions that required us to expand our initial audit testing to include an additional 362 transactions totaling $68,576.71 from 2009-2015. Of these transactions, most were for a legitimate department purpose, were authorized by the department, and generally followed county policies and guidelines. Audit testing included the following risk areas where no exceptions were found: • Cash Advances — The Purchasing Card Program and Procedures prohibits using pCards for cash advances. Audit testing did not identify any cash advances. • Split Purchases — Splitting orders or costs to circumvent the transaction limit is prohibited. No split transactions without documented approval were identified. • Restricted Purchases - The Purchasing Card Program and Procedures specifically restricts using pCards for printing, County storeroom supplies, and safety equipment without prior approval from the Purchasing Division. Audit testing did not identify any of these purchases that did not obtain adequate prior approval. We commend the Department of Finance on the effectiveness of the controls that have been implemented. However, audit work did identify some instances of non-compliance. Some purchases did not follow county policies, had a questionable public purpose, and may have violated state law. The Hawai"i State Constitution, the Hawai"i Revised Statutes (HRS), the Hawai"i County Charter, the Hawai"i County Code, and the various county policies all require that public funds be used for a public purpose. (See Appendix A for details.) While the majority of the transactions tested from 2009-2015 were appropriate, we found 164 transactions totaling Purchasing Card Program :: Audit Results 16