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

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County Purchasing Card Program and Procedures are not entirely consistent with state law, state purchasing card guidance, and other county policies. The pCard program is administered by the County of Hawai'i Department of Finance, in coordination with the State Procurement Office (SPO). Under the Hawaii Revised Statutes (HRS) chapters 103D and 103F, the SPO develops rules, as well as policies and procedures, to implement the procurement law for both state and county 11 governments.3 The purpose of these rules is to promote economy, efficiency, and effectiveness in the procurement County policies are not of goods and services, and construction for the State and entirely consistent with counties. (HAR 3-120-1)4. state guidance The SPO website (http://spo.Hawai"i.gov/) provides various pieces of guidance including procurement circulars and the State of Hawaii Purchasing Card Program and Procedures. In the State's Program and Procedures, purchases for "goods and services for personal use" are specifically restricted. Whereas the County's Purchasing Card Program and Procedures and the Cardholder Agreement does restrict purchases for goods and services for personal use, it includes the language "unless specifically authorized". By including this caveat, there is an increased risk a cardholder may use the card inappropriately. Furthermore, this exception is in violation of the Hawaii State Constitution, Article 7, Section 4 and the Hawaii Revised Statutes (HRS) Section 103D-101 which requires that public money be used for a public purpose. The County's Purchasing Card Program and Procedures also restricts the purchase of liquor. However, again it includes the language "unless specifically authorized". By including this caveat, there is an increased risk of a violation of the County's Alcohol -Free Workplace Policy. Since we work for the taxpayers, the County should also consider the public perception of allowing the purchase of alcohol using public money. Program monitoring could be improved. To comply with the monthly pCard reconciliation deadline, the Department of Finance Purchasing and Accounts Payable (AP) Divisions currently has approximately 12 to 16 hours to review 100 percent of the County's pCard transactions each month. The Department of Finance reviews each transaction for compliance with procurement rules, account payable requirements, and accounting codes. If errors are identified, transactions are returned to the department for review, clarification, or correction. However, the Department of Finance relies on the individual departments to determine if the transaction is appropriately authorized and is for a legitimate department purpose. In addition, County departments are not consistently 3 State Procurement Office Executive Overview January 2013 4 http://spo.hawaii.gov/wp-content/uploads/2013/11/3-1201.pdf Purchasing Card Program :: Audit Results 112