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

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Alcohol Purchase Several bottles of wine totaling $348.03 were purchased for the Hawai"i State Legislators to be given as gifts (omiyage) during the April 2014 Legislative Hearings. Although omiyage is an allowable purchase, the County provided other gifts to the Legislators including cookies and coffee. According to the County's Purchasing Card Program and Procedures, use of the pCard for the purchase of liquor is prohibited unless specifically authorized. It is unclear what type of authorization was required or obtained in this situation. In addition, since both the State and County are drug and alcohol free work environments, from a reasonable person standpoint, this transaction does not appear appropriate. Furthermore, the State Procurement Office (SPO) stated that although the purchase of alcohol is not explicitly prohibited in the State pCard policy, it is implied and treated as a given prohibited item. We believe the State guidelines are a sound point of reference and we question whether these items have a clear public purpose or benefit. While the Department of Finance reviews all pCard transactions for procurement compliance, appropriate documentation, and authorization, it appears the Mayor's Office was not always held to the same requirements as other departments. We recognize the Mayor's Office has duties and responsibilities that are not standard, and in fact, are often extraordinary in nature. However, there is no written statute to exempt any employee and/or department from following state law and county policies and procedures. In addition, the County Code Article 15, Section 2-83 requires fair treatment of County employees and officers. The same policies and processes should be applied to all cardholders. Only then can the rules be enforced without confusion. By not strictly enforcing County and State purchasing requirements, the County unnecessarily increases the risk that fraud or abuse may occur. Moreover, without adequate supporting documentation, the County is unable to demonstrate an expenditure is for a legitimate public purpose. As employees become aware of control weaknesses, such as approved personal expenses or allowing unsupported and unauthorized exceptions, employees predisposed to misusing the card may be more likely to attempt to process improper purchases. Failure to address these control issues could lead to the erosion and weakening of the control system and increase the County's exposure to fraud, waste, and abuse. Reimbursements were not always made timely. As described above, some employee's pCard purchases were identified in the accounting system as "personal" and "Miscellaneous - County to be reimbursed". In most cases, a Purchasing Card Program:: Audit Results 19